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EMU: PMI Composite Final
| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.5 | 51.5 to 51.5 | 51.3 | 51.5 |
| Services Index | 51.9 | 51.9 to 51.9 | 51.6 | 52.4 |
Highlights
The January PMI readings suggest the euro area has entered 2026 with growth intact but clearly losing momentum. The composite PMI eased to 51.3, its weakest in four months, confirming that expansion continues but at a pace well below historical norms. The slowdown was led by services, where activity growth softened markedly as demand nearly flatlined and new orders rose at their weakest rate since last summer.
This loss of traction reflects fragile underlying demand rather than supply constraints. Firms were able to run down backlogs at the fastest pace in eight months, signalling limited pressure on capacity. Employment, after three months of gains, effectively stalled as manufacturing job losses offset modest services hiring. This points to caution among firms despite continued expansion.
Price dynamics remain uncomfortable. Input costs rose for a third consecutive month, pushing inflation pressures to above-trend levels, and firms responded by raising output prices more aggressively. This combination of slowing growth and firm inflation highlights a mild stagflationary undertone.
Geographically, divergence persists. Spain remains the growth leader despite slowing, Germany and Italy regained momentum, while France slipped back into contraction. Encouragingly, business expectations improved to their strongest since May 2024, suggesting confidence is recovering faster than activity itself. These updates take the RPI to minus 1 and the RPI-P to 0, meaning that economic activities are now within the expectations of the Euro area.
Market Consensus Before Announcement
No revision expected in the composite final from the flash at 51.5. No change expected in services final from the flash either at 51.9.
Definition
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 S&P Global 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.
Description
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.