Euro area composite flash PMI index eases again in July, growth momentum likely to slow in H2 2018

The flash release of European Commission Consumer sentiment index yesterday indicated that the headline indicator moved sideways at -0.6, a nine-month low. Meanwhile, the focus today was on business confidence surveys, mainly the flash July PMIs for the euro area. At the beginning of the year, the composite euro area PMI index was on a downward trajectory, only breaking the trend last month, rising to 54.9. However, this month the index eased again to 54.3, 0.4 points lower compared to the second quarter average, noted Daiwa Capital Market Research in a report.

The composite employment indicator stayed consistent with its readings in the earlier quarter, implying that the labor market should continue to tighten; however, the new orders indicators implied that there is less work in the pipeline, especially with goods demand from overseas continuing to ease. Looking at the sector level data, indicators for manufacturing were generally little changed, with the headline index rising from 54.9 to 55.1 and the output index moving sideways at 54.2.

In the meantime, services indicators came in weaker. The headline service PMI index dropped to 54.4 while the employment and new business measures also fell. In all, the latest PMIs appear to imply that business sentiment continued to be on shaky grounds this month and so the economy might struggle to regain momentum in the second half of the year, stated Daiwa Capital Markets.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -45.6642, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -77.4837. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex