Final Version for June

Germany: 52.1, prel. 53.3, pr. 53.5 (May), 54.9 (Apr)
France: 50.1, prel. 49.2, pr. 50.5 (May), 52.8 (Apr)
Italy: 50.1, pr. 48.1

The services sector in the Euro-zone fell into contraction from its 50.6 reading in May. UK and US services also faltered and were below the 50 boom-bust level. Today's final version was lower than the preliminary release that showed the PMI at 49.5.  

Capsule Comment from Preliminary Version (June 23rd): "Activity in the manufacturing and services sectors fell below the 50 boom-bust level separating expansion from contraction for the first time in 5 years. The data suggests that the slowdown many have seeing in the data for the Euro-zone already is hitting home with the prospect of an interest rate increase by the ECB also looming for July. Higher inflation is cutting into consumers and firms purchasing power, limiting the services they are using. Higher prices for things like airline tickets are dampening demand for services that may not be considered necessities. Consumer confidence has become increasingly pessimistic and will impact how much they will spend in the economy."

Preliminary version for June

Germany Services PMI: 53.3, forecast 53.1, pr. 53.5 (May), 54.9 (Apr)
France Services PMI: 49.2, forecast 50.8, pr. 50.5 (May), 52.8 (Apr)

Activity in the manufacturing and services sectors fell below the 50 boom-bust level separating expansion from contraction for the first time in 5 years. The data suggests that the slowdown many have seeing in the data for the Euro-zone already is hitting home with the prospect of an interest rate increase by the ECB also looming for July. Higher inflation is cutting into consumers and firms purchasing power, limiting the services they are using. Higher prices for things like airline tickets are dampening demand for services that may not be considered necessities. Consumer confidence has become increasingly pessimistic and will impact how much they will spend in the economy.

Final version for May

Germany Services PMI: 53.5, forecast 53.7, prel. 53.7, pr. 54.9
France Services PMI: 50.5, forecast 50.7, prel. 50.7, pr. 52.8
Italy Services PMI: 48.1, forecast 49.5, pr. 49.8
Spain Services PMI: 43.3, pr. 42.5

The final version of services PMI matched the preliminary estimate. It showed a reading of 52 in April. Retail sales in the Euro-zone fell today as consumers are becoming more pessimistic about the economic situation as a result of high inflation and an unwillingness by the ECB to lower interest rates from their 6-year high of 4%. Services activity cooled in Germany, France and Italy. Indications are that second quarter growth in the Euro-zone will be lower than the during the 1st quarter. If this leads to a cooling in inflation then the ECB may act to lower rates, but currently its stance is to stamp out inflation which continues to run high as a result of ever increasing oil and food prices.

Capsule Comment from May 23rd preliminary release: "Activity in the services sector in the Euro-zone cooled by a larger than expected amount. The preliminary measure for May's Services PMI fell to 50.6. This level matches a 4 1/2 year low that we saw in January. Drops were led by industries such as banking and telecommunications as consumers have tightened their wallets in response to higher inflation and higher credit costs. Manufacturing also declined, to 50.5 from 50.7, though this fall met expectations."

Preliminary Release for May

Activity in the services sector in the Euro-zone cooled by a larger than expected amount. The preliminary measure for May's Services PMI fell to 50.6. This level matches a 4 1/2 year low that we saw in January. Drops were led by industries such as banking and telecommunications as consumers have tightened thei wallets in response to higher inflation and higher credit costs. Manufacturing also declined, to 50.5 from 50.7, though this fall met expectations.

Final Version for April

The Services PMI inched up to 52 for April, from its preliminary estimate of 51.8 from April 23rd. It was 51.5 in March and 52.3 in February. The Euro-zone, led by strong growth in Germany, is managing to grow while other economies like the UK and Australia struggled the past month. Since dipping to 50.6 in January, service sector activity has picked up, though not to the levels seen during the middle part of 2007. The credit crunch and financial market turmoil, a strong euro, and high inflation could cut into domestic spending. The ECB wants to hold rates steady to combat inflation, so this data supports its stance.  

Capsule commentary from April 23: "Growth in European services industries unexpectedly improved in April, rising from 51.6 to 51.8. The consensus had been for a slight decline. Gains were led by a pick up in Germany, which saw its Services PMI increase to 54.6 and has managed to weather the recent slowdown rather well. Other countries, such as France and Italy, are not having as good a time managing higher price inflation and a higher Euro exchange rate.

Preliminary Release for April

Growth in European services industries unexpectedly improved in April, rising from 51.6 to 51.8. The consensus had been for a slight decline. Gains were led by a pick up in Germany, which saw its Services PMI increase to 54.6 and has managed to weather the recent slowdown rather well. Other countries, such as France and Italy, are not having as good a time managing higher price inflation and a higher Euro exchange rate.

Manufacturing growth slowed down in the Eurozone, falling to 50.8 from its reading of 52 in March.  

Preliminary Release for March

So much for all the talk about how manufacturing and services have been an indicator that the euro-zone can withstand a slowing US demand and global financial volatility. The stronger euro and record oil prices are the factors here, hurting euro zone exports. Also the dynamics are slowing as well. According to bloomberg, the ECB lowered its growth projection from the 2.0%-2.1% range to the 1.7%-1/8% range. After the poor Manufacturing and Services PMIs were released, the euro slid more than 150 pips by 10:00AM EST.