- Services PMIs showed stronger expansion in the eurozone
- Manufacturing PMIs indicated a stronger decline
- US PMIs follow later today
PMIs point to strong services, weak manufacturing
The eurozone released April PMIs today, and the results were a mixed bag. The services and manufacturing sectors continue to show strong divergence, with services showing stronger growth, while manufacturing continues to struggle. The EUR/USD response to the mixed data was muted.
In the eurozone, Services PMI rose from 55.0 to 56.6 and beat the market consensus of 54.5 points. German Services PMI climbed to 55.7, up from 53.7 and above the market consensus of 53.3 points. The improvement indicates that business activity is expanding and driving economic growth in Germany and the eurozone. The strong numbers are that much more impressive as the global outlook remains uncertain and the recent banking crisis has caused tighter credit conditions.
The picture is much less rosy in the manufacturing sector. Eurozone Manufacturing PMI slowed to 45.5, down from 47.3 and below the estimate of 48.0 points. Germany’s Manufacturing PMI eased to 44.0, down from 44.7 and shy of the estimate of 45.7 points. What is particularly worrying is the manufacturing data is getting weaker – the German release slowed to its lowest level since May 2020. The weakness in manufacturing is dampening the economic activity recovery in Europe and there’s no indication that the situation will improve anytime soon.
The US releases PMI reports for April later today. The Services PMI is expected to dip to 51.5, down from 52.6, while the Manufacturing PMI is projected to tick lower to 49.0, down from 49.2 points. As we saw in the eurozone today, the trend globally has been an expansion in services and a decline in manufacturing. The service sector (business activity) remains resilient in the face of an uncertain global outlook, while manufacturing continues to struggle with rising prices and supply chain issues.
EUR/USD Technical
- EUR/USD is testing resistance at 1.0967. Above, there is resistance at 1.1102
- There is support at 1.0858 and 1.0763
