Flash PMI readings from the euro zone painted a mixed picture for the economy in October, with improvements seen in Germany but France reporting a slowdown in the manufacturing and services sectors.
France’s manufacturing PMI fell to 44.5 instead of rising to 44.9 during the month, reflecting a sharper pace of industry contraction, while the services PMI came in at 48.3 instead of the consensus 49.8.
However, previous readings saw notable upgrades, with the September manufacturing PMI revised from 44.0 to 44.6 while the services PMI was changed from 48.3 to 49.6 to reflect slower declines in business activity than initially reported.
Link to the October 2024 French HCOB Flash PMI
Meanwhile, the German manufacturing PMI jumped from 40.6 to 42.6, beating estimates of 40.7, and the services PMI rose from 50.6 to 51.4 to indicate a much faster pace of industry expansion.
Components of the composite report revealed that companies reported further declines in employment, although the decline in output eased slightly.
Link to German HCOB Flash PMI for October 2024
This resulted in the region’s flash manufacturing PMI rising from 45.0 to 49.9 versus expectations of 45.1 and the flash services PMI falling from a figure of 51.4 which was upgraded to 51.2, below the estimate of 51.5.
Fundamental data showed that companies responded to the weak demand environment by reducing production, as new orders fell for the fifth month in a row.
Link to Eurozone PMI for October 2024
Market reactions
Euro against major currencies: 5 minutes
Overlay of the Euro against major currencies Chart by TradingView
The Euro, which had already started to decline about an hour before the PMI release, saw a sharper decline after seeing weaker than expected results from France.
A similar sharp rise occurred when German numbers surprised to the upside, as these eased fears of deteriorating business conditions in the region’s largest economy.
The shared currency continued to rise slowly, before rising slightly again when Eurozone PMI numbers were published, although it fell quickly against the yen and New Zealand dollar.
EUR/USD, EUR/CAD and EUR/CHF moved sideways into positive territory a few hours after the Purchasing Managers’ Index (PMI) report, while EUR/GBP fell back to Lows during the day.