The economic data schedule in the eurozone was fairly busy yesterday, with the Markit composite and services PMI final readings for Germany and the eurozone. Composite PMI in the eurozone dropped to 53.1 in October from 54.1 the previous month and, while this was better than the 52.7 the markets had been expecting, it still represents a significant slowdown in business activity across the eurozone. Indeed, the reading points to weakest growth rate in the private sector since September 2016.
We also saw services PMI in the eurozone drop to 53.7 from 54.7 in September. Again, this was not quite as bad as first feared, but it is still the weakest pace of expansion in the service sector since January 2017. The eurozone cannot seem to catch a break at present, with many pieces of data proving to be a little disappointing.
However, there was some good news, as German factory orders unexpectedly increased by 0.3% in September, which was far better than the 0.6% drop the markets had predicted. It is the second straight month of growth in factory orders, largely owing to a 2.8% increase in domestic orders. Still, the euro weakened against sterling following Raab’s ‘thumbs up’ comment(!) and traded sideways against the dollar throughout the day as everyone waited for the midterm election results to start coming in.
The German industrial production figures for September and construction PMI for October are on the schedule today. We will also see the eurozone’s retail sales figures for September. On a monthly basis, the markets are expecting the figure to climb to 0.1% from -0.2% the previous period.
