THE EUROPEAN single currency traded firmer from the start of last week as the Manufacturing Purchasing Managers’ Index delivered a positive survey result, highlighting the Eurozone’s resilience despite the slowdown in China and further emerging market declines.
The December Manufacturing PMI index result was 53.2 up from November’s 52.8, with the Italian’s delivering their best performance for 57 months. On a quarterly basis the average reading for the 4th quarter was the highest since quarter one back in 2014.
Further encouragement can be taken from seeing the Greek PMI move back into growth territory during December, meaning all nations surveyed are not only climbing but now report expansion, the first time since April 2014.
The Eurozone Services PMI’s held firm in December delivering an index result of 54.2, helping the composite EU PMI figure covering all sectors to a four and a half year high of 54.3.
Other positive news saw the EU unemployment rate dip again to 10.5% in November down from 10.6% recorded in October. The weaker retails sales result for November at a negative 0.3% on the previous month was shrugged off by the markets as typically December should show the majority of uplift as Christmas shopping takes hold.
Data from the US was rather mixed over the week, although the markets were always going to be looking towards the all important non- farm payroll data with most market commentators expecting a figure above 200,000 and that the US unemployment rate will drop again this time below 5% hopefully to 4.9%.
Recent US dollar strength has stalled following the dovish tone to the minutes of the December FOMC ( Federal Open Market Committee) meeting.
The Institute for Supply Management surveys on US Manufacturing and Non-Manufacturing did show a contrast of outcomes. The Manufacturing survey contracted for a second consecutive month with a reading of 48.2. The Non-Manufacturing sector posted its 71st consecutive month of growth albeit December’s result at 55.3 was lighter by 0.6 percentage points on November’s outcome.
The ADP national employment report private payroll release was way ahead of expectations with 257,000 jobs added between November and December, helping to fuel higher expectations of Friday afternoon’s non-farm outcome.
The dollar has made great ground against sterling but has given up recent ground against the Euro as China’s stock market wobbles impact global markets and risk aversion take hold with the single currency taking strong benefit of investors choice of safety.