EUROZONE DATA: Jan Flash PMIs:Infltionary Pressures Pick Up Across The Eurozone

As was a running theme last year, the Eurozone ex-France and Germany outperformed the two largest economies in the PMIs. We note that increased inflationary pressures were seen across the region, with the exception of France.

• The Eurozone manufacturing (46.1 vs 45.4 cons, 45.1 prior) and composite (50.2 vs 49.7 cons, 49.6 prior) January flash PMIs were stronger than expected, following beats in the French and German prints earlier this morning. The services PMI was broadly in line with consensus at 51.4 (vs 51.5 cons, 51.6 prior). 

Key notes from the release concerning the Eurozone ex-France and Germany: 

• “The rest of the Eurozone continued to outperform the largest two economies, seeing a further modest expansion of output, the thirteenth increase in a row. That said, the pace of growth slowed from December”.
• “Germany and France posted further reductions in employment, while the rest of the euro area continued to register job creation”.
• “The rest of the Eurozone also saw the pace of output price inflation quicken, while selling prices in France decreased for the first time in almost four years”.
• “Sentiment in Germany rose sharply, while confidence at French firms was only just inside positive territory. Strong optimism was signalled in the rest of the Eurozone.”

Broader comments for the Eurozone overall:

• “Limiting the pace of recovery in output across the Eurozone was continued demand weakness”…” As was the case with output, a rise in services new business contrasted with an ongoing decline in the manufacturing sector.”
• “Efforts to secure new orders continued to be hindered by particular demand weakness in international markets”
• “Signs of improvement in business activity meant that staffing levels neared stabilisation at the start of the year”
• “Sentiment was still weaker than the series average, however. There were contrasting trends at the sector level as manufacturing optimism strengthened to a seven-month high, but services confidence dipped”.