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Eurozone Flash Composite PMI Fell 53.5, Business Activity Cools

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Eurozone business activity cools in January

According to Markit, the Eurozone flash composite PMI (purchasing manufacturers’ index) stood at 53.5 in January 2016 as compared to 54.3 in December 2015. With the Eurozone cooling off, the iShares MSCI Eurozone (EZU) and the Vanguard FTSE Developed Markets ETF (VEA) fell 8.6% and 8.5%, respectively, over the past month as of January 22.

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The flash services PMI led the rise

With the reading above neutral, the Eurozone has continued its upturn in business activity. Though at a 12-month low, the services PMI rose to 53.6 in January—as compared to 54.2 in December 2015—and led the upturn. As a result, SAP (SAP) and Banco Santander (SAN) rose 0.36% and 4.9%, respectively, as of January 22.

The flash manufacturing PMI fell to a three-month low

Daimler AG (DDAIF) and Volkswagen (VLKAY) fell 16.0% and 12.9%, respectively, over the past month as of January 22, with a fall in the Eurozone flash manufacturing data. The manufacturing PMI stood at 52.3 in January 2016 as compared to 53.2 in December 2015.

Improving inflows of new business and intakes of new orders in both sectors prompted the Eurozone manufacturers and service providers to continue adding jobs in January. A rise in business confidence and an improvement in expectations helped the companies in Germany and France to be optimistic about employment in January.

Input cost and selling prices fell

With the fall in oil prices, input cost pressure remained on the downside during January. The businesses passed on the benefit of low prices by cutting the output prices in January.

In January, both manufacturing and services stood above the neutral mark but cooled off after showing a revival in December 2015.

However, we’ll have to wait to see whether the Eurozone picks up the growth momentum with the European Central Bank’s extended monetary stimulus going ahead.

Germany is one of the influential economies in the Eurozone. Let’s take a look at Germany’s composite numbers in the next article.

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