Euro area services PMI index falls in October

Euro area services business activity index came in a bit above flash reading in October. The final IHS Markit euro area PMI Services Business Activity Index came in at 53.7, down from September’s 54.7, marking the slowest growth since the beginning of 2017. Survey in October indicated slower growth in German activity and in Ireland. Italy saw a contraction of activity for the first time since May 2016. On the contrary, France and Spain saw faster growth, though growth rates stayed well down on those seen around the turn of the year.

Levels of incoming new work increased strongly, although at the slowest pace since May. However, with new work having now risen continuously for almost four years, capacity pressures persisted as underlined by another rise in backlogs of work. Service sector jobs growth continued to be elevated as a result, with October’s net rise in jobs only slightly below September’s near 11-year peak.

Cost pressures continued, as increased prices for energy and fuel, alongside increased wages, led to another marked upturn in service providers’ operating expenses. A noticeable rise in output charges was recorded as firms, especially those based in Germany, sought to protect margins through a rise in their own prices.

Finally, business sentiment weakened in the latest survey period as political worries weighed on sentiment. Most notably, German service providers saw expectations fall to a near two-year low.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Euro was bullish at 83.0345, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -60.5504. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex