THE TAKEAWAY: Euro-zone composite PMI reported at 47.8 in May -> Markit says recession likely to continue in Q2 -> Euro trading higher
The Euro-zone composite output index beat expectations for May in an initial estimate released by Markit. The Composite PMI was reported at 47.8, higher than expectations for 47.2 and up from 46.9 in April. The manufacturing Purchasing Managers’ Index rose to 47.8 and beat expectations for 47.0; the index for services rose to 47.5 and beat expectations for 47.2. The flash PMI release is based on 85% of total replies to the surveys, and an index result below 50.0 indicates sector decline.
The German PMI for Manufacturing was reported higher in May at 49.0, beating expectations for 48.5. The German services PMI disappointed expectations at 49.8. The French PMI for manufacturing rose to 45.5 and beat expectations for a 44.7 index, but the PMI for services disappointed expectations at 44.3.
Markit’s Chief Economist Chris Williamson said the May PMI’s indicate that the six-quarter recession is likely to continue into a seventh quarter in Q2 of 2013. “The economy is likely to contract in the second quarter at a similar rate to the 0.2% decline seen in the first three months of the year,” said Williamson.
However, the Euro rose higher following the release, as the PMI’s were better than expected. EUR/USD is trading around 1.2875 at the time of this writing, and resistance may be provided by the key 1.3000 figure. A downward trend line from November 2011 may provide support near here.
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EURUSDDaily: May 23, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .