Macro Monday 40 - Euro Area Composite PMI

1 Nis

Macro Monday 40

Euro Area Composite PMI
(Released this Thurs 4thApril 2024)

The Euro Area Composite PMI (Purchasing Managers’ Index) is a significant coincident economic indicator that provides insights into the current overall health of the eurozone economy.

The Euro Area Composite PMI data is collected from a representative panel of around 5,000 manufacturing and services firms around the EU and then a weighted average of the two is provided to create the composite reading.

This index tracks variables such as sales, new orders, employment, inventories, and prices. Very similar to the US PMI that we previously covered.

The Chart

The chart illustrates the following metrics;

🟢Manufacturing PMI (green line)
🔴Services PMI (red line)
🔵Overall composite PMI (Thick Blue Line)

The green zone (>50) illustrates the economic expansion zone and the red area illustrates the economic contraction zone (<50). The 50 level itself is neutral.

Now, let’s very briefly cover the last three weeks of Macro Mondays No. 38, 39 & todays 40. These all featured the Eurozone economic health and can be valuable metrics to remain informed on. With a click of my charts in trading view you can remain updates with a visual easy on the eye.

EU Current Sentiment Outlook
(negative but improving)

1.The Euro Area Economic Sentiment Index is based on current sentiment surveys from EU Businesses and consumers for all 27 EU Member States.
-The current economic outlook as distinguished by businesses and consumers in the EU is currently below average at 96.3 (<100 is below average and >100 is above average).
- We have seen an improvement since Sept 2023 with an increase from 93.4 to 96.3 at present but remain in the negative.

EU Forward Looking Sentiment
(Firmly Positive)

2.The Euro Area ZEW Economic Index is a 6 month forward looking economists outlook for 20 of the 27 Euro Member states.
-The ZEW Index is anticipating optimistic economic conditions for the coming 6 months with a current reading of 33.5 which is well above the historical average of 21.39 on the chart. Economists in then EU see things improving over the coming two quarters.

EU Manufacturing and Services current performance composite
(Neutral - leaning negative)

3.Featured today, the Euro Area Composite PMI is a coincident indicator offering real-time health of the Eurozone economy through data collected from manufacturing and services firms.
-The Euro Area Composite PMI is currently close to neutral at 49.9 (just under the neutral 50 line) demonstrating that over the recent month we have been in marginal contraction in the EU according to the manufacturing/services composite.
- However, if we look at the individual Manufacturing PMI we can clearly see we are in negative/contractionary territory at 45.7 (green line) whilst the services PMI is rising into expansionary territory at 51.1 (red line). This is common theme in the US PMI at present also with services performing better than manufacturing sector.

The beauty of these charts is that you can go onto my TradingView Page and press update, and the chart will update you with all these metrics, informing you at a glance with how these metrics are performing collectively with a nice visual guide.

Thanks again for coming along and I hope this additional Eurozone chart helps you in your current and future understandings of EU Economic Sentiment, Forward looking economists sentiment and how manufacturing and services firms are feeling overall.

Bottom line is, economic sentiment appears to be leaning optimistic for the immediate future, however we await more readings for a conclusive trend direction from the coincident indicators, the ZEW Index and the Euro Area PMI index.

PUKA

4 Nis

Not

Euro Area Composite PMI
Rep: 50.3 ✅Higher than Expected. Expansionary✅
Exp: 49.9
Prev: 49.2

Euro PMI Turns Positive
The Euro Area Composite PMI moved marginally into expansionary territory today for the first time since June 2023 moving from 49.2 to 50.3 from Feb to Mar.

This expansionary move for the Euro Area Composite PMI could add weight to the positive reading in the EU ZEW Economic Sentiment index that is currently projecting positive economic sentiment for the coming 6 months (previously covered - its what 350 EU economists anticipate, not guarantee).

Euro Services Vs Manufacturing PMI
Leading the PMI composite into expansionary territory is the Euro Area Services PMI (red line in chart), a subset within the composite which reported an increase from 50.2(Feb) to 51.5 (Mar). This was above expectations of 51.1.

Euro Area Manufacturing PMI (green line on chart) was released earlier in the month at 46.1, above the forecasted 45.7 but below the prior 46.5 reading. Manufacturing remains in contractionary territory at 46.1. The next date for release of the Euro Area Manufacturing PMI is a preliminary release on the 23rd of April (confirmed on the first working day of May). Manufacturing PMI in Euro Area is expected to be 49.00 points by the end of Q2 (Jun 2024). A positive move towards the 49 level in the next reading is needed to achieve this outcome. Lets see if we can meet the expectation on the 23rd April with a nice initial move towards 47.

All in, the 27 European Union member states appear to be climbing out of a contractionary cycle, however manufacturing PMI is lagging, as is the sentiment from businesses and consumers. This is very evident from the charts shared over the past 3 weeks on Macro Mondays.

1. Macro Monday 38✅Positive 6 month forward
The EU & German ZEW Economic Sentiment Index
Economists Outlook

2. Macro Monday 39 🔴Remains Contractionary
Euro Area Economic Sentiment Indicator (ESI).
Business and consumer outlook.

3. Macro Monday 40 ✅Marginally Expansionary
Euro Area Composite PMI

All my charts are on trading view ideas section. Click the link in my profile above and you can open up the charts, press play and see how each chart is performing.

PUKA