- Chris Williamson, chief economist at Markit
Both services and manufacturing sectors in the 18-nation bloc in July expanded, meaning confidence strengthened significantly. The main reason for a more solid performance is the ECB's action launched on June 5. The central bank entered uncharted territory and trimmed all three interest rates and expanded its loan programmes. While some analysts were questioning the efficiency of these measures, and the single currency was still appreciating, companies were already showing stronger confidence about economic future. In contrast, consumer confidence remained unchanged.
The shared currency rebounded from its eight-month low on Thursday, with EUR/USD jumping 0.15% to 1.3481. A composite PMI, which tracks activity in both manufacturing and services sectors, increased to 54 this month from 52.8 a month earlier, hitting a three-year high last seen in April. That was the 13th straight month the gauge remained above the 50 mark, which separates growth from contraction. Analysts, however, expected it to remain unchanged at 52.8. Activity in German manufacturing and services sectors picked up, Spanish unemployment surprised markets to the upside, while French services sector improved as well. Now it is a question whether GDP will receive a boost from this data, as currently the economy is expected to expand at a modest pace of approximately 0.4% per quarter.
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