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PMIs: US Services Sparkle, Euro Area Faces Hurdle

S&P Global's Purchasing Managers' Index (PMI) contracted for the seventh consecutive month in December, falling to 47. This defied expectations of a slight increase to 48 from November's 47.8.

The data from Germany and France reinforced this overall trend. Both countries' PMIs continued to decline, reaching 46.7 and 43.7, respectively. However, a positive note was observed in Germany, where the manufacturing PMI rose from previous months, aligning with the improved ZEW index.

In contrast, the composite PMI for the US increased to 51 in December, up from 50.7 in November. This uptick was primarily driven by a significant rise in the services PMI, which climbed to 51.3 from 50.8. Meanwhile, the manufacturing PMI further declined, dropping below 50 to 48.2.

Our take: The US composite PMI is rising while the Euro Area's is declining. Concurrently, the Federal Reserve indicated potential rate cuts, whereas the European Central Bank did not discuss such measures. Upside-Down World?


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