Euro zone service PMI in Jan highlights the bloc’s disappointing start to 2016

By FXStreet FXStreet (Mumbai) – The euro zone services PMI released today showed a drop in the index in January indicating that the economy in the bloc has indeed started the year on a weak note. With prices remaining low deflationary pressures are mounting raising concerns for the ECB which is already worried about inflation figures which has stayed too low for too long.The Services PMI for January came in at 53.6, unchanged from the December’s reading. Manufacturing sector has not fared will as evident from the Composite PMI. Composite PMI came in at 53.6.

Chris Williamson, chief economist at Markit observed that rrowth of activity, order books and employment have all lost momentum. Average prices charged for goods and services also dropped at the fastest rate since last March underlining the rising defationary pressure in the bloc. It is quite evident that both inflation and growth did not manage to pick up momemntum despite the ECB’s QE programme and other easing measures like negative rates. This has led many analysts to question the impact of the central bank’s easing measures. Economists feel the easing tools are either insufficient or the monetary policy has a whole is ineffective.

Williamson considered the readings to be …read more

Source:: FX Street