Euro area’s flash manufacturing PMI index falls further in September, GDP growth likely to average 2 pct in 2018

Euro area’s purchasing managers’ index for the manufacturing sector continued to drop sharply in September. The manufacturing PMI index dropped by 1.3 points to a new year-low at 53.3 in the month. On the contrary, the purchasing managers’ index for services rose a bit by 0.3 points to 54.7. It has thus been moving sideways for seven months, noted Commerzbank in a research report.

The positive news is that the economy will probably not collapse, stated Commerzbank. The PMI index for services suggests that the underlying growth rate continues to be above the long-term average. Thus, the real GDP growth is expected to stay unchanged at 0.4 percent in the third quarter. According to Commerzbank, the euro area economy, on average, is likely to expand by 2 percent in 2018.

Meanwhile, the negative message is that the soft phase in industry is expected to carry on for some time, which might prevent the euro area economy from gaining momentum again. The subdued demand for industrial products are due to the previous appreciation of the euro and the slightly less dynamic global economy and the fear of an escalation of trade conflicts, added Commerzbank.

At 10:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 14.2368, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -11.5268. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex