The final estimate of the services index should decrease from 54.3 (flash estimate) to 54 in March, marginally up from February (53.9). Looking at the regional breakdown, the lagging Italian services PMI is expected to increase significantly from 50 to 51, and thereby narrowing the gap between euro area countries levels.
The composite index (the average of the manufacturing and services PMIs), which usually moves together with GDP growth, is also expected to mark lower from 54.1 (flash estimate) to 54. According to our econometric model, this points to GDP growth of 0.4-0.5% which is in line with our forecast for Q1 15.
"we expect the PMIs to hover around the current levels. From a fundamental point of view, we believe that GDP growth will not exceed 1.6-1.9% yoy and observe that PMI are already at level consistent with that GDO growth range", says Societe Generale
lower oil prices, weaker euro, the easing of budgetary policies, lower interest rate are positive but their multiplier impact on the economy is set to be lower than during past recoveries, with a lower contribution of net external trade and capex to GDP growth.
