Eurozone: Mixed PMI readings – BBH

The Eurozone reported its flash PMI readings and they were mixed and gave a sense that the regional economy continues to expand at an above-trend clip but a slightly slower pace, suggests the analysis team at BBH.  

Key Quotes

“The composite slowed to 55.9 from 56.7, which is somewhat more than expected.  The services PMI slipped to 54.9 from 55.8, while the manufacturing PMI rose to 58.6 from 58.1.   Manufacturing employment was the highest on record (time series began 1997).  The weaker results were a function of unexpected slowing in the service sector, which is about the domestic economies.  The manufacturing sector, where exports are more significant, accelerated.”  

“Separately, the ECB reported that banks mostly kept lending standards unchanged in Q3, while there was a pick-up in demand.  Credit standards for mortgages and consumer loans eased.  According to the report, the ECB's asset purchases have had a positive impact on liquidity positions and market-financing conditions.  It has had a negative impact on net interest margins.  In the Q3 survey, banks said they used the liquidity created by asset purchases to mainly grant loans.  The bank survey underscores what the ECB will likely call the re-scaling of its asset purchases rather than tapering, which as it noted previously, implies an endpoint.”