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US to Europe: Its service PMIs turn today – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 3, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Research Team at Danske Bank, suggests that after several days of focus on the global manufacturing sector focus today turns to the service sector outlooks.

    Key Quotes

    “While we look for a drop in service PMIs in Spain and Italy, we expect the final euro area print to stay unchanged at 53.0. In terms of January retail sales in the euro area we expect a moderate increase due to the lower oil price, progress in the labour market as well as solid consumer confidence.

    Note that yesterday we revised our euro area GDP growth forecast for 2016 considerably lower from 1.8% to 1.5% (consensus 1.6%). The downward revision is mainly due to external factors that add uncertainty and hence are headwinds to business investments, while also keeping export growth subdued.

    In the UK we expect the service PMI survey to show a small decline, suggesting that the UK economy might slow down somewhat in the coming quarters. However, we expect levels to remain decent and well above 50, thus pointing to positive growth.

    In the US, the ISM non-manufacturing is due and it will be interesting to see whether the decline in the index over the past three months has continued in February. The service Markit PMI came out very weak last week with a decline of 3.7 points to 49.8, which places downside risk on ISM non-manufacturing. We estimate the index declined to 52.9, indicating a slower but still solid growth in the service sector. We will also get the final releases of service PMIs and durable goods as well as the weekly jobless claims figures.”
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