The initial reading of the eurozone Purchasing Managers’ Index (PMI) showed that manufacturing growth in the currency union maintained a solid pace during January.
IHS Markit’s eurozone manufacturing PMI rose from 54.9 in December to 55.1 in January, the highest level since 2011. This reading exceeded analysts’ expectations for a reading of 54.8. At the same time, the services PMI slipped to 53.6 from 53.7 and below projections of 53.8. The composite PMI, which measures activity in both the manufacturing and the services sectors, fell from December’s five-year high of 54.4 to 54.3. January’s eurozone PMI implied that the economy expanded at the fastest pace since March 2014.
In the US, President Donald Trump signed an executive order to withdraw his country from the Trans-Pacific Partnership (TPP) trade agreement with 12 nations. In his election campaign Trump had argued that the TPP trade deal was harmful to American workers and manufacturing. He also plans to renegotiate the North American Free Trade Agreement with Mexico and Canada. He said the TPP with Japan, Malaysia and other countries was a potential disaster for the US. Some economists warned that many of Trump’s proposals could backfire on the US economy, resulting in either a rise in prices or a trade war.
In UK, a report by the Office for National Statistics (ONS) showed that Britain’s economy grew more than projected in 2016’s fourth quarter. GDP grew 0.6 per cent in the quarter, similar to the 0.6 per cent growth in the previous two quarters.
This was higher than economists’ forecast of a GDP rise of 0.5 per cent. The GDP growth of 2.2 per cent for 2016 exceeded the 2.1 per cent estimate. Darren Morgan from the ONS said “strong consumer spending supported the expansion of the dominant services sector, and though manufacturing bounced back from a weaker third quarter, both it and construction remained broadly unchanged over the year as a whole.”
This report was compiled by Bank of Valletta for general information purposes only.