Services PMI in European Union Better Than Anticipated

Alan Penny

6 January 2020

2 min read

Euro stalls

  • Italian Services and Spanish Services PMI both better than anticipated
  • French Final Services PMI figures came in as expected
  • German and EU Final Services PMI also better than indicated

Early on Monday, the bulk of the European Union released services PMI figures, giving us a look at how purchasing managers will be spending within the service-related industries. The PMI is thought of as a forward-looking indicator because it surveys purchasing managers’ intentions for inventory or other services that are related to an expanding or growing business.

a forward-looking indicator because it surveys purchasing managers’ intentions for inventory

The idea is that the higher the number, the more likely it is that the business is going to expand into the future. It shows confidence from those charged with the control of making new purchases in services.

Figures announced looking positive

Across the European Union, we have seen much better than anticipated numbers. In fact, the worst result was for the French Final Services PMI, which came in as expected at 52.4 for the month. Other highlights include the Spanish coming out with a figure of 54.9 against the anticipated 53.9 for the month. The Italians, not to be outdone, released 51.1 for the month, while the market was looking for 50.9 as a reading.

Perhaps the most important of the readings would be the German Final Services PMI, coming in at 59.9, which is much higher than the expected 52.

Finally, the European Union Final Services PMI came in better than anticipated, which is to be expected with all of these numbers being relatively strong. The figure was 52.8 against the 52.4 figure the market was looking for.

As a side note, Sentix Investor Confidence came out at 7.6 over the anticipated 3.0 for the month, which gives us a look at how investors in the European Union feel about the future.

In other words, we are starting to see optimism across the board in the EU, and that should continue to put the Union on a more solid footing than seen lately.

Services sector in EU expanding

The main takeaway from these announcements is that the services sector of the European Union seems to be expanding. This would be a very strong sign, considering so much negativity was observed emerging from the European Union until recently.

This is just the latest in a string of pleasant surprises from the EU, and it should be looked at as a possible buying opportunity. European stocks will of course continue to benefit from this move, but this is more or less just another piece of the puzzle.

The European Union has done slightly better recently, so it makes sense that it should form part of a slow and gradual turnaround for the continent.

The currency markets may or may not benefit as far as the euro is concerned, but clearly this will be welcome news for stock traders in places like Germany, France, and Spain.

Written By
Alan Penny

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