Euro-Zone Manufacturing and Services Contract for Seven Consecutive Months as Demands Falter

Daily Forex Fundamentals | Written by DailyFX | Dec 16 08 09:21 GMT |

Service-based activity in Euro-Zone contracted for the seventh consecutive month in December as the advanced PMI reading slipped to 42.0 from 42.5. In addition, the manufacturing PMI dropped to 34.5 from 35.6, and led the PMI composite to reach its lowest level since recordkeeping began in 1998 as the index slipped to 38.3 from 38.9 in the previous month. A deeper look into the report showed that new orders declined to 27.4 from 28.8, while the employment component weakened to 39.1 from 41.0. The latter suggests the acceleration in the pace of job cuts, which will add to growth concerns and weigh on consumption trends. Both the manufacturing and services readings were slightly better than expected, but still down from November and firmly below the 50 point no change mark, thus pointing to ongoing contraction in both the manufacturing and services sectors, suggesting that the Euro-Zone may contract at a faster pace in the fourth quarter, and economic activity may remain subdued well into the next year as growth prospects deteriorate. EUR-USD recorded 1.3656 session lows, with profit taking accelerating in to the German and Euro-Zone PMI release. German Manufacturing Contract at Record Pace, Heightening Fears of a Deep and Severe Recession The advanced services PMI reading for Germany unexpectedly rose to 46.2 from 45.1 in November. However, manufacturing activity contracted for the Fifth straight month as the PMI reading plunged to 33.5 from 35.7. This was the lowest reading since the start of the survey in April 1996. The breakdown of the report showed that new orders plunged to 25.8 from 29.1 in the previous month, while the employment component slipped to 40.9 from 43.6. The services reading remains firmly below the 50 point no change mark, thus indicating ongoing contraction in both the manufacturing and services sectors, which backs expectations of another negative GDP number that quarter. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.