Weakness of PMI data will put pressure on European stock markets

Tradehay.com: 25/01/2021 - 04:51

European stocks' downtrend accelerated with the release of January's Flash PMI composite, showing weaker data compared to December.

Weakness of PMI data will put pressure on European stock markets

At 47.5, the Eurozone PMI recorded the third consecutive month of contraction.

Notable points:

• Employment: Euro-wide employment fell for the 11th month in a row; German employment numbers increased slightly in January; France's employment growth increased for the first time in nearly a year.
• New orders: the service sector saw volume decline for the second fastest rate since May, while factory output growth weakened to lowest levels since the start of recovery. . The continuing slowdown in services in Germany was generally offset by (albeit slower) growth in manufacturing orders. The decline in France's new business sector was even worse than December, amid falling domestic and foreign demand.
• Expectations: Business expectations in the Eurozone in terms of output over the next 12 months have declined compared to December. Optimism in Germany is the highest in almost 3 years. French companies are still optimistic, albeit less than in December.

European leaders warn that the continent will continue to be blockaded for longer and potentially more stringent, unclear as to when the restrictions will be lifted. A health pandemic emergency in Europe is proving to be a major challenge, and the economic loss resulting from a double recession is becoming an inevitable scenario for the ECB . The optimism of European businesses will be tested more and more, especially given the slow launch of vaccines.

Richard Jones, Bloomberg