|Composite - Level||54.3||54.4||54.4|
|Services - Level||53.6||53.7||53.7|
Eurozone economic activity was adjusted just minimally stronger in the final PMI report for January. At 54.4, the key composite output index was a tick firmer than its flash estimate and matched the 43-month peak recorded in December.
The minor upward revision was largely due to a healthier services sector where the flash PMI was also nudged 0.1 points higher to 53.7, again, equalling its year-end print. Further solid gains were recorded by new orders and employment and business confidence held close to December's 11-month peak. Input cost inflation recorded its strongest reading since March 2012 and selling prices were hiked for a third successive month, albeit not quite as sharply as at year-end.
Regionally in terms of composite output, the best performer was Ireland (59.3) ahead of Germany (54.8) and Spain (54.7). France (54.1) narrowed the gap but Italy (52.8) sunk to a 3-month low.
Today's report should be consistent with Eurozone real GDP growth around the 0.5 percent quarterly rate posted in October-December last year. Moreover, with the new future composite future output index rising to its strongest mark since the series began in July 2012, businesses would seem quite confident about the outlook. 2017 looks to have got off to a decent start; the ECB will just be hoping that it can be sustained throughout the year.
The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by Markit using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
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