Euro area’s January flash manufacturing PMI likely to fall to 53

Euro area's flash PMI for January is expected to be healthy as was in the final report of December.  A marginal fall is expected in the manufacturing and composite numbers for the currency bloc. Italy's confidence is likely to remain at strong level. There is a likelihood of a marginal decline in Spain's indicators. Also, Germany's manufacturing indicators are also expected to decline slightly, while services are expected to have a larger fall. However, the outlook for Germany continues to be buoyant.

Meanwhile, France's services PMI declined below 50 in December. However, the services indicators are expected to rise to about 51, whereas the flash manufacturing PMI is expected to rise marginally to 51.6 from 51.4. This rise will help counter the small declines expected in other euro area nations.

The overall euro area flash manufacturing PMI is expected to fall slightly to 53 from 53.2, while the services PMI is expected to remain at 54.2. This will give a composite number of 54.2 that will be on par with the GDP growth rate of 0.45% q/q.