The Recession in Services Deepens in Europe, While Manufacturing Remains in Good Shape

Services fell in the deepest recession ever in the Eurozone during the lock-down months in spring, declining to around 10 points, while manufacturing PMI indicator fell to around 30 points. After the reopening of the world, we saw a strong rebound in services and manufacturing.

But while manufacturing has been keeping a decent pace of expansion, services are in another deep recession, which is only getting worse as coronavirus restrictions increase. Mind you, this is happening in Europe only. Below are the services and manufacturing PMI data from the EUrozone and the UK:

Eurozone January Services and Manufacturing PMI Report

Services PMI January 45.0 vs 44.5 expected
December services PMI was 47.3 points, revised to 46.4
Manufacturing PMI 54.7 vs 54.4 expected
Composite PMI 47.5 vs 47.6 expected

Another divergence between manufacturing and services which makes sense as the social (services sector) is more vulnerable to COVID-19 transmission. EURUSD unfazed on this and the coming vaccine will mean all this will be looked through in the big picture.  

UK January Services and Manufacturing PMI Report

January services PMI 38.8 points vs 45.0 expected
January Manufacturing 52.9 points vs 53.6 expected
December Manufacturing was 57.5 points
Composite 40.6 points vs 45.5 expected 
Prior composite was 50.4 points

Ouch that’s a bad miss. Fastest rate of contraction in services since May 2020.