THE TAKEAWAY: The Euro-zone PMI for manufacturing was revised lower to 45.1 -> Markit economist says manufacturing may drag on Q3 GDP -> Euro trading steady
The Euro-zone Purchasing Managers’ Index for August was revised slightly lower to 45.1 from a preliminary estimate of 45.3. The index for manufacturing activity was still improved from July’s 44.0 survey result. Germany’s PMI for manufacturing was also revised lower from 45.1 to 44.7, according to Markit.
August marked the thirteenth straight month of contracting activity in manufacturing; a PMI below 50.0 indicates negative activity levels. There was a significant downturn of new manufacturing business in August as well as lower output. Ireland was the only country to report an increase in manufacturing output.
Markit’s Senior Economist Rob Dobson said, “the rate of decline was a little slower than in July, providing some heart that the manufacturing downturn may be easing, but the sector is on course to act as a drag on gross domestic product in the third quarter.”
The PMI’s signal for a lower GDP in Q3 should be currency negative for the Euro, however EURUSD did not move significantly following the revised PMI’s. The pair has found recent resistance by the key 1.2600 level, which is also near a year-long downward trend line; and support might be found at 1.2528, by the 76.4% retracement of July’s decline.
EURUSD 15-minute: September 3, 2012
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