Global Macro

The Euro area economy, as measured by the regional Purchasing Manger’s Index (PMI) inched up a seven month high at 53.3; slightly better than the 53.2 reading from July. However, the headline number belied slowing in growth in manufacturers order books and a lower rate of new jobs in the Eurozone’s dominate services sector.

The overall PMI, which is closely watched by ECB policymakers, suggested both growth and inflation could fade over the third quarter and into year-end. Inflationary pressures remained muted as the sub-index of selling prices fell for the third consecutive month. The overall inflation reading in the Eurozone printed at 0.2%, which is much lower than the ECB’s target of just under 2%.

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On balance, today’s PMI report shows that the Eurozone has remained somewhat resilient to the expected post-Brexit slump, but does little to alter the view that the ECB will increase the pace of its asset purchase program at its next meeting on September 8th.


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