Euro Area final services PMI likely to hover around four-year high

The figures for the flash euro-area services and composite PMIs for September, published last week, were 54.0 and 53.9 respectively, showing a slight decline on the August figures. The final numbers might edge up slightly from the flash to 54.2 for services and 54.0 for composite. 

"This still means a small decline compared to their August levels, continuing to hover just below the four-year peak reached in June. Regionally, the German numbers are expected to equal their flash numbers (54.3 for both services and composite). France is set to see modest rises from 51.2 to 51.3 for services, 51.4 to 51.6 composite", says Societe Generale. 

Spain is likely to experience a large drop, in line with the recent drop in the manufacturing PMI, though remaining at high levels, services are seen falling from 59.6 to 58.0 and the composite down from 58.8 to 57.3.

"Overall, the euro-area composite figure of 53.9 and services of 54.2 would be consistent with growth of 0.45% qoq, close to the Q3 GDP forecast (0.4% qoq). The recovery continues to be led by consumption, due to lower fuel prices boosting household disposable income", states Societe Generale.

Conversely, the contribution to GDP growth from net exports will be modest. Indeed, the weakness in the euro will help boost export market shares, but the gains cannot entirely offset by the weakness in global trade.