Flash PMIs dropped markedly in the US but edged up in eurozone
US: Markit Manufacturing PMI (Feb. Prel.): 50.8 vs 51.5 expected (prior: 51.9)
- The manufacturing PMI just avoided a decline into contraction but fell to the lowest since August.
US: Markit Services PMI (Feb. Prel.): 49.4 vs 53.4 expected (prior: 53.4)
- Business confidence in the service sector slumped to the lowest level since October 2013 as companies have become more worried about the coronavirus and its impact notably on the travel and tourism sectors. The new business index dropped from 52.5 to 49.7, the lowest since October 2009.
US: Existing home sales (Jan.): 5.46M vs 5.44M expected (prior: 5.53M revised from 5.54M)
- Existing home sales edged lower (-1.3% m/m) but remain at solid levels, supported by a robust labor market and low mortgage rates.
Eurozone: PMI Manufacturing (Feb P): 49.1 vs 47.4 expected (prior: 47.9)
- Sentiment surprised on the upside in February led by Germany despite fears that the coronavirus-related disruptions to supply chains and demand in Asia will drive activity lower.
- Easing of tensions between US and China has probably been the main driver behind the positive surprise.
- However, the details of the survey suggest a weaker picture (new export orders fell sharply) and the impact of the virus might not have fully hit yet.
Eurozone: PMI Services (Feb P): 52.8 vs 52.3 expected (prior: 52.5)
- Service sentiment rose, mainly due the upside surprise in France (52.6 vs 51.3 expected).
- However, the outlook remains highly uncertain, notably in respect to the potential disruptions to travel, tourism and demand arising from the coronavirus outbreak.
UK: PMI Manufacturing (Feb P): 51.9 vs 49.7 expected (prior: 50)
- Sentiment jumped in February and signal the strongest improvement in business conditions since April 2019.
- The expansion of manufacturing was supported by a sustained rebound in client spending since the start of 2020, with the latest survey pointing to the fastest rise in new work since March 2019.
UK: PMI Services (Feb P): 53.3 vs 53.4 expected (prior: 53.9)
- Service sentiment dropped slightly but remained well above 50.
- The slowdown partly reflected weaker demand from abroad, as signaled by a renewed fall in export orders in February. Companies reporting a fall in overseas sales often cited a marked reduction in new work from clients in Asia.
Eurozone: CPI (Jan F.): 1.4% m/m as expected (prior: 1.3%)
- Core inflation fell to 1.1% y/y, down from 1.3%.
- Supercore inflation, which excludes the prices of goods and services that show little response to the business cycle as well as package holidays, slowed to 1.38% from 1.46%