2025-12-16 09:00:00
- Prior 53.6
- Manufacturing PMI 49.2 vs 49.9 expected
- Prior 49.6
- Composite PMI 51.9 vs 52.7 expected
- Prior 52.8
After the downcast from the German numbers, this was well expected. Both the services and manufacturing prints are softer than estimated, pushing down overall activity in the euro area for December. That said, it still marks another expansion in activity at least to wrap up the year. That won’t change much for the ECB outlook as such. EUR/USD continues to trade near unchanged on the day at 1.1752 with large option expiries seen at 1.1750. HCOB notes that:
“Economic growth slowed at the end of the year due to a slight contraction in the manufacturing sector and weaker
momentum in the service sector. The weaker performance is primarily attributable to German industry, where the downturn
intensified. In France, on the other hand, there are signs of a cautious recovery in industry, although a single monthly figure
should not be overrated. However, the service sector, which had expanded last month, is stagnating there, while Germany’s
service companies saw another solid rise in activity. All in all, the runway into the new year seems pretty unstable.
“Despite a softening of growth, the service sector continues to look relatively robust. Companies have no reason to complain
about new business and are therefore hiring additional staff. Looking ahead, however, companies have become somewhat
more cautious, which is likely due in part to the decline in order backlogs. We expect the service sector to continue to play a
stabilising role for the economy as a whole in the coming year. However, a real upturn will only succeed if the manufacturing
sector regains its footing.
“Cost inflation in the service sector reached its highest rate in nine months in December. The European Central Bank, which
is meeting on December 18 and is monitoring service inflation particularly closely, is likely to see its publicly stated policy of
leaving interest rates unchanged confirmed. It is clear that price pressure, driven in part by wage increases, is still
noticeable.”
