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Eurozone PMI index revealed a growth declining. The European economy seems to have run aground along the route, and proceeds backwards instead of going...

Eurozone PMI index revealed a growth declining. The European economy seems to have run aground along the route, and proceeds backwards instead of going forward.

This is what was stated by Markit, a London company of financial information, which offered a very different version of events than that presented Thursday, April 21 from Mario Draghi, President of the European Central Bank.

The preliminary manufacturing PMI index for the Eurozone in April recorded a value of 51.5 against 51.6 in the previous figure. The services PMI has instead reported a value of 53.2, making it slightly larger than the previous 53.1. The preliminary composite index, however, showed a value of 53, disappointing the previous value at 53.1.

According to Markit, the composite manufacturing and services PMIs have made it clear all the trouble that the Eurozone is experiencing, as opposed to the words offered by Mario Draghi during his conference.

The Purchasing Managers’ Index (PMI) is indicated on a scale from 0 to 100. The average value of 50 indicates an expansion from the context in which the majority of companies have seen their business decline. A PMI showed at 50 would correspond to an unchanged GDP.

The data on PMIs provide an indication of the economy’s growth, allowing to anticipate the intervention on interest rates relative to the occurrence of variations in inflation.

Chris Williamson, Chief Economist at Markit said: “The eurozone economy remains stuck in a slow-growth rut in April, with the PMI once again signaling GDP growth of just 0.3% at the start of the second quarter, broadly in line with the meager peace of expansion seen now for a full year.”

In reference to allegations made by Draghi during his speech, Williamson says: “A failure of business expectations to revive Following the ECB’s announcement of blackberries aggressive stimulus in March is a major disappointment and suggests that the modest pace of growth is unlikely to accelerate in coming months.”

The words of the President of the ECB have pointed out how the ECB’s monetary policies are producing the desired effects on growth and inflation.

In Thursday’s session, the euro-dollar exchange rate has gone up on a roller coaster after the press conference of Mario Draghi. After the announcement on unchanged rates of the European Central Bank, the euro-dollar exchange rate rose to 1.1398. When the press conference ended, EUR / USD was back down and ended the session lower.

We are in front of the sign of a weak economic growth, less resistant to the risk of potential shocks. But before you fall into being too pessimistic, it is worth remembering that we are still far from a contraction in economic territory, in which the Eurozone remained between the summers of 2011 and 2013.

Do not forget, however, that the data provided this time on PMI are called ‘flash’ and indicate preliminary estimates, which could be revised, either upward or downward, with the release of final figures later this month.

Source: Markit                                                                                                                                 

 
  • Elly

    July 12, 2016 #1 Author

     

    It’s a relief to find somonee who can explain things so well

    Reply

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