Eurozone: Next week data includes German Ifo and EZ PMI - Danske Bank

Analysts at Danske Bank expect next week data to show a decline in the Eurozone PMI on the back of weak new orders and political risk. They will be looking to German Ifo figures for signs of a rebound.

Key Quotes: 

“In the euro area, we have a busy week ahead of us. On Thursday, the February flash PMIs are due out. In January, PMIs signalled that the euro area economy is edging closer to stagnation – (indicated by PMI level around 50) – with manufacturing PMI falling to a 50-month low at 50.5 while service PMI showed signs of stabilisation.”

“Falling new orders and the ongoing political disputes still point to some downside risk for the manufacturing index, which we therefore expect to fall to 50.2 in February while we see scope for a rebound in services PMI to 51.4 in light of strengthening domestic demand.”

“Friday brings the German Ifo figures and after the economy had a disappointing growth finish in 2018, we will keep an eye out for signs of a rebound in activity following the latest encouraging signs from Chinese leadings indicators and the German car sector.”

“The final euro area inflations figures for January are due. The preliminary print saw core inflation ticking up 0.1pp to 1.1%, driven by higher services prices. However, it will be interesting to see whether it is the start of a gradual, persistent uptick in core on the back of the Phillips curve dynamics finally playing out or merely driven by one-off factors and a methodological change in the calculation of German HICP.”