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Europe Brief


Both the ECB and BoE raised rates by 50 basis points last Wednesday. The BoE appears to be moving closer to peak rates while Lagarde has left the ECB in preparation for another half-point hike in March and possibly additional moves thereafter. Both sides of the channel are seeing growth that is better than they expected. But, the UK is still the under-performer among G7 countries, and long term growth potential has eroded markedly — also thanks to Brexit.

The S&P Global Eurozone Manufacturing PMI In the January final reading, it was 48.8. While the headline is in negative territory for now, it has risen to a 5-month peak. 48.9 was the manufacturing output index’s 7-month peak. The data for January were surprisingly strong. The PMI report noted that stocks of finished goods fell for the first time since May 2013. While order books continue to slide, optimism about the future of the year has risen over the past three month, which is encouraging.

The Services PMI is already back in expansion territory, and hit a 6-month high of 50.8, which helped to lift the S&P Global Eurozone Composite PMI to 50.3. This was slightly higher than the initial reading of 50.2, but a significant improvement over the 49.3…

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