- French composite PMI falls to 50.1
- German composite PMI falls to 52.6
Purchasing Managers' Indices (PMIs) for the Eurozone's two largest economies, Germany and France, dented the euro's strides for new highs against the greenback on Thursday morning, at least temporarily.
The EUR/USD was exploring new territory and moving into two-year highs before PMI data showed that the economic outlook may not be as rosy as some may have hoped.
In fact, the EUR/USD touched an intraday high of 1.3823, levels unseen since November 2011, ahead of the French PMI release.
The flash reading of French composite PMI for October showed a decline to 50.1 from 50.5 in September, sending the euro slightly lower.
Services PMI fell to 50.2 from 51.0 and manufacturing PMI fell to 49.4 from 49.8. Analysts were expecting a slightly better performance, with an estimate of 51.2 for services and 50.3 for manufacturing, expecting that the latter would cross the 50-point threshold that signals expansion.
Markit, which compiles the data, concluded that the French private sector output remains broadly unchanged in October. Perhaps more worrying is that one of the more forward-looking subindices showed a renewed fall in incoming new business.
According to Jack Kennedy, Senior Economist at Markit, "The French private sector economy delivered a flat performance at the start of Q4, as a slower fall in manufacturing output offset a softer showing from the service sector. Although new business slipped back into contraction, stabilising employment and improved service sector business expectations provide some signs of encouragement as we move towards the end of the year."
PMIs for Germany showed a similar story but were a bit more optimistic. The data indicated that new business volumes rose for the fourth consecutive month but the rate of expansion was only marginal and the slowest since July.
Overall, the German composite PMI fell to 52.6 from 53.2 in September. Services PMI fell to 52.3 from 53.7 and manufacturing PMI rose to 51.5 from 51.1. Both were lower than the consensus estimates of 53.8 and 51.6, respectively.
The data shows that German economic growth continues in the private sector but at the slowest rate since July in what was already being seen as a fragile recovery.
While the employment sub-index pointed to lower employment, Tim Moore, Senior Economist at Markit, commented in a relatively optimistic matter taking on a more general context for the fourth quarter.
"Germany's private sector started the final quarter of 2013 in a positive fashion as manufacturing and service sector output levels both increased from those seen during September. A slower rate of expansion in services activity meant that overall growth eased slightly from the trend recorded over the third quarter." he said.
"However, the stronger manufacturing outturn during October is a signal that the Germany's resilient economic performance has continued this autumn, while sustained gains in new orders suggest that private sector companies will remain on a growth footing in the months ahead."