THE TAKEAWAY: Euro-zone composite index for December revised lower to 47.2 -> Higher PMI’s could suggest recovery in 2013 -> Euro trades lower
Euro-zone composite output fell slightly more in December than originally estimated according to a final estimate of Markit’s Purchasing Managers’ Index. The composite output index was revised from 47.3 to 47.2, which was still a nine month high. The PMI for services was confirmed at 47.8 in the final estimate, up from November’s 46.7 PMI. A PMI below 50.0 indicates contraction in the surveyed sector’s activity.
The average composite output index for Q4 was 46.5, which was little changed from the two previous quarters. The services sector reported a drop in activity for the eleventh month in a row, according to the PMI. New incoming business among the combined services and manufacturing sectors contracted for the seventeenth straight month in the Euro-zone.
Germany’s all-sector output returned to positive in December, coming in at 50.3. Ireland saw the highest growth in output with an index result of 54.2, while Spain’s output index only rose to 43.9 in December.
The Euro-zone has experienced decline over the second and third quarter of 2012, and according to today’s PMI, it doesn’t seem like the area will pull out of the recession in the fourth quarter. Markit’s Chief Economist Chris Williamson said, “the surveys at least bring some substance to the belief that the worst is over and that a return to growth is in sight for the region in 2013.”
As the PMI’s were released, the Euro continued to fall to 1.3000 against the US Dollar in forex trading. EURUSD has fallen towards the key figure since yesterday’s release of the Fed minutes. Support could be provided by the key 1.3000 figure, and resistance could be provided by the previous resistance line at 1.3158.
EURUSD Daily: January 4, 2013