Euro area’s flash purchasing managers’ index for service sector dropped by 2 points to 51.4 in December, as compared with consensus expectations of 53.4. The main reason for the solid fall was the fall in the French index, which dropped by 5.5 points to 49.6. Nevertheless, the index excluding France also dropped by 0.5 points. Meanwhile, the manufacturing sector’s purchasing managers’ index dropped a bit to 51.4 from 51.8, as compared with consensus expectations of 51.8. The index excluding France dropped 0.2 points.
Today’s data comes in sharp contrast to the ECB’s economic optimism, which expects average economic growth of 0.5 percent sequentially in the quarters ahead, noted Commerzbank in a research report.
The wave of protests in France has left deep traces in the economy. However, even in the rest of the euro area, the economy does not seem to have picked up speed again, as generally expected. However, the euro area economy is not on the way to recession. The ECB’s very expansionary monetary policy is a solid argument against this. However, the headwind from exports should also ease in the course of 2019, said Commerzbank.
“For example, politicians in China have meanwhile taken measures to support the domestic economy. The global industrial sector will also benefit from this”, added Commerzbank.
At 14:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bearish at -100.842, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 153.395. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
