Eurozone: PMIs revised higher - BBH

Analysts at BBH explain that the service and composite PMI release is the main economic data from Europe today and the service PMI was revised from the flash estimate of 54.7 to 55.4 from it is still off the May reading of 56.3, and is off for the second month.  

Key Quotes

“The composite PMI was also revised higher from the 55.7 flash estimate to 56.3.  It was 56.8 in May.  It averaged 56.6 in Q2 after 55.6 in Q1 and underpins expectations that the regional economy may have accelerated.”

“In terms of the country breakdown, German and French flash service reports were revised higher.  Note that the French and German composite readings did slip from May.  Italy's service PMI eased to 53.6 from 55.1 and was weaker than the 54.6 median estimate in the Bloomberg survey.  Still, the Q2 average composite was 55.5 after 53.9 in Q1 and 52.5 in Q4 16.  Spain accelerated.  The services PMI jumped to 58.3 from 57.3 and the composite rose to 57.7 from 57.2.”

“The inability of the euro to rally on what seems to be good news appears to be a break from the recent price action where nearly any excuse was sufficient to lift the single currency.  It is consistent with our sense that the market has discounted a favorable news stream for Europe and may have gotten ahead of itself.  Initial support is seen in the $1.1320 has been tested, and a break would set up a test on $1.1280.  The US two-year premium over Germany has widened about six basis points this week and the 10-year premium is about three basis points wider this week."