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After recording its first contraction in factory activity since June 2020, the Eurozone is all set to release data on manufacturing and services PMIs on Tuesday, August 23.
The S&P Global manufacturing PMI for the Eurozone dropped to 49.8 in July, from 52.1 in the previous month, signalling the first contraction in the region’s manufacturing sector since June 2020. Manufacturing output moved lower for a second month, while new orders for goods fell for a third straight month.
The services PMI, however, was revised higher to 51.2 in July, versus a preliminary reading of 50.6, but still pointed toward the weakest growth in services activity since January.
So, what are the expectations now?
Analysts expect the manufacturing PMI to rise back to a reading of 51.6 in August, with services PMI likely to rise further to 52.5.
Last month, the European Central Bank increased interest rates for the first time in more than 11 years. The ECB boosted its key interest rate by 0.5 percentage points to 0.0% and is looking at further increases this year. But with some cooling seen in US consumer prices, the markets are now expecting less aggressive rate hikes from the Fed next month. Expectations of interest-rate hikes by the ECB have also declined for the end of the year.
How to trade the STOXX Europe 50 index using the PMI data?
European stocks traded higher after the release of earnings reports from major companies and inflation data from the US. Stronger-than-expected data on manufacturing and services PMIs might provide further support to the EU50 index soon.
Get ready for the release of the PMI data for the Eurozone, which could bring exciting trading opportunities. With Index CFDs, disappointing data could also provide trading opportunities.
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