Euroarea composite PMI likely to have risen in January

PMIs in the euro area ended 2016 on a better note. The final composite figure for the month of December came in at 54.4, a rise from November’s 53.9. The December print was the highest since May 2011. This strength is likely to continue this year and might have even risen further in January. The figures for France still have scope to come in line with their INSEE counterpart. Italy and Spain do not have flash estimate but are likely to record better figures in January, noted Societe Generale in a research report.

However, Germany’s composite indicator might have dropped by a few ticks. This might be a sign of things to come for the currency bloc as a whole. With inflationary pressure expected to accelerate and looming political uncertainty, they should weaken slightly.

“For January, our forecast would be consistent with GDP growth of 0.5 percent in 1Q, but we note that the PMIs for the first month of a quarter are often not the best guide for growth in that quarter”, added Societe Generale.