THE TAKEAWAY: Euro-zone composite PMI index rebounds to 45.8 -> Markit sees worsening economic contraction in Q4 -> Euro is trading slightly higher
Euro-zone composite output has rebounded from a 3-year low in November, according to Markit’s first estimate of the Purchasing Managers’ Index. The PMI for composite output was reported at 45.8, slightly higher than expectations for the preliminary index to remain unchanged from October’s 45.7 composite output. A PMI below 50.0 indicates a drop in activity, and Euro-zone composite output has fallen for 14 of the last 15 months.
The PMI for manufacturing in the Euro-zone hit an eight month high at 46.2, thereby beating expectations for 45.6. The index saw services activity contract at the fastest pace in 40 months, according to the PMI, which came in at 45.7, and disappointed expectations for 46.0.
New business fell in the Euro-zone at one of the fastest rates since mid-2009. Sentiment dropped sharply in Germany, while improving slightly in France. Employment fell across the region for the eleventh successive month according to Markit.
The Euro-zone slid into a recession in the third quarter of this year, when it reported a contracting economy for the second quarter in a row. Markit Chief Economist Chris Williamson said, “The PMI suggests that the downturn is set to gather pace significantly in the fourth quarter. The final three months of the year could see GDP fall by as much as 0.5%.”
The Euro rose slightly in forex markets as Germany and the whole of the Euro-zone reported better than expected PMI’s. EURUSD is currently trading around 1.2850 and support could be provided by an earlier support line at 1.2824, resistance could be provided at 1.3055, by the 38.2% retracement of the move from the pair’s all time low to its high.
EURUSD 15-minute: November 22, 2012