UBS team sent us the following comments on Friday:
Eurozone PMIs were up across the board in July, and better than expected. The composite index rebounded strongly, from 52.8 in June – a six-month low – to 54.0 in July (consensus 52.8), essentially catching up with the three-year high registered in April. The services PMI rose particularly strongly, from 52.8 to 54.4 (consensus 52.7), while manufacturing increased only marginally, to 51.9 from 51.8 (consensus 51.7). New orders in manufacturing remained subdued, not least due to geopolitical concerns (Ukraine).
Job creation also remains moderate, given ongoing cost pressures. Input costs are rising, but output prices continue to decline. Markit stressed the wide discrepancies between Germany (strong) and France (soft), adding that, outside these two countries, the region saw the strongest monthly increase in business activity since August 2007, particularly in services. Markit estimates that the July PMIs signal a Eurozone growth rate of c0.4% q/q.
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