Home›Forex›Central Banks›Euro zone PMIs point to resilient growth and cooler pr…

Euro zone PMIs point to resilient growth and cooler price pressures

Nomura said the August data and contained inflation expectations keep the case open for an ECB 25bp hike in September.

Reported · Written up by our desk · Central Banks

Nomura’s European Economics team said the euro area’s August Purchasing Managers’ Index signaled resilient growth, with manufacturing leading the pickup and price pressures easing.

In its view, the manufacturing output PMI rose to its highest level since February 2022, while the services PMI was unchanged, with weakness in Germany and France offset by strength in the periphery. Nomura also noted that euro area PMI input and output price indices fell broadly, though they remain above pre-Iran war levels.

Nomura pointed to the ECB’s Consumer Expectations Survey as additional support, saying 3-year ahead median inflation expectations declined to 2.7% in July, while 5-year ahead median expectations were unchanged at 2.4%. It argued the benign PMI price trends suggest little risk of consumer inflation expectations building again in August.

Looking ahead, Nomura said the PMIs support its baseline that the ECB can still deliver a 25bp rate hike in September, while the BoE would keep rates unchanged, given the data’s indication that output growth has stayed fairly resilient amid renewed Middle East tensions.

More like this

Sources