- Prior 50.5
- Composite PMI 51.2 vs 51.2 prelim
- Prior 51.0
Once again, it's the services sector that is keeping the ship from sinking in the euro area economy. Things picked back up again in September amid a jump in new business and that's a positive signal to wrap up the quarter. HCOB suggests that this might lead to 0.4% quarterly growth in the Eurozone economy, and that is one that the ECB can take heart in with regards to their current policy stance. HCOB notes that:
“Things are running a little bit more smoothly in the service sector. After almost stagnating in August, business activity picked up more strongly in September. This recovery is practically broad-based geographically, with moderately robust growth observed in Germany, Italy, and Spain. The situation is different in France, where the change of government and uncertainty about whether the new prime minister will be able to hold on to power has had a negative impact on service providers. Business activity declined noticeably here.
“The increase in new business suggests that the sector is likely to grow again next month. However, new orders have not yet been sufficient to increase backlogs. Nevertheless, service providers are taking a more positive view of the environment, as illustrated by the rise in the index measuring firms’ future prospects.
“The service prices data, which is under particular scrutiny by the eurozone's monetary authorities, are likely to confirm the stance of those ECB members who do not want further interest rate cuts. Although both cost and sales price inflation rates are slightly above the long-term average, they declined in September.
“The composite PMI has been in expansionary territory for the entire third quarter, so it can be assumed that GDP has grown in that quarter. Our nowcast, which takes the PMI into account alongside other indicators, calculates a growth rate of 0.4 percent compared to the previous quarter.”
