Eurozone manufacturing and services PMIs fly higher in November
A new six-year year high for eurozone manufacturing and services sentiment pushed the single currency higher on Thursday morning, as the strengthening 'Euroboom' put the UK's low growth firmly in the shade.
The preliminary manufacturing purchasing managers' index for the euro area in November rose to 60.0 from 58.5 the month before, the survey from IHS Markit showed, when a slight easing to 58.3 had been the consensus forecast.
Markit's 'flash' services PMI also jumped to 56.2 from 55.0 a month earlier, ahead of the much smaller increase to 55.1 that the market had expected.
Together, this pushed the eurozone's composite PMI for November up to a surprisingly strong 57.5, the highest print since April 2011, from 56.0 in October.
German composite PMIs also came in above expectations at 57.6, up from 56.6 thanks to strong manufacturing sentiment, where the manufacturing index a 79-month peak and a mixed-picture services sector remained well above its historical average and the third quarter average.
Likewise, the French composite PMI surprised again to the upside, jumping to 2.8 points to 60.1, the highest reading since May 2011,
This was driven by both manufacturing and services sectors, with services sentiment climbing above the other for the first time since last July.
Barclays economists were impressed by the "on fire" eurozone economy: "In our view, there are two main things to highlight in today’s release. First, firms are facing strong operating capacity pressures: new orders are at multi-year highs, and despite firms raising their hiring intentions to record levels, the backlog of works continue to accumulate (the index is at the highest since July 2006) and delivery times lengthen.
"Second, inflationary pressures are also increasing. Input prices are on the rise due to higher commodity prices, and given the strength of the demand, firms no longer hesitate to favour margins over clients. This pushed selling prices to the highest since June 2011," the economists said in a note to clients.
Overall, this soft data pointed to a strong end to 2017, with Barclays' PMI-based GDP indicator indicating 0.7% quarter-on-quarter growth versus its current 0.6% fourth quarter GDP forecast.
After the upside surprises in Germany and France, the bank expects sentiment to have improved in the peripheries too, with Italy, Spain, Ireland up 1.3 points on average in the services sector, and 0.8 points on average in the manufacturing sector.