Euro Area PMI at 7-Month Low

Arthi Gupta
23 Sep, 2010
New York City

The European indexes declined after euro-zone PMI fell to a seven-month low in September. German private sector growth dipped and French business confidence rose in the month. Czech Republic left its key rate unchanged at 0.75%.

[R]4:00 PM Frankfurt – The European indexes declined after euro-zone PMI fell to a seven-month low in September. German private sector growth dipped and French business confidence rose in the month. Czech Republic left its key rate unchanged at 0.75%.[/R]

U.S. stocks traded lower after weekly jobless claims rose and markets in China region, Japan and South Korea were closed.

German public debt increased 1.7% in the first-half and building industry orders declined in July. France private sector growth slowed in September. Italy jobless rate rose in the second quarter.

In Paris CAC 40 Index plunged 61.45 or 1.65% to close at 3,673.60 and in Frankfurt DAX Index edged lower 67.53 or 1.09% to close at 6,140.80.

The European Parliament on Wednesday gave its final approval for setting up financial watchdogs to supervise the banking sector in the region, financial markets and the insurance and pensions industry in a move aimed at avoiding a repeat of the financial crisis that erupted almost three years ago.

The euro-zone''s private sector growth decelerated markedly in September as manufacturing and services both slowed, according to latest figures released today.

The Markit euro-zone composite purchasing managers'' index fell to a seven-month low of 53.8 in September from 56.2 in August, the largest fall since November 2008.

The Purchasing Managers'' Index for manufacturing fell to an eight-month low of 53.6 in September from 55.1 in August and the services PMI declined to a seven-month low of 53.6 in September from 55.9 in August.

German private sector growth eased in September from the previous month led by both manufacturing and services sector, according to a report by the Markit Economics released today.

The Markit composite purchasing managers'' index declined to an eight month-low of 54.8 in September from 58.4 in August. The manufacturing PMI slipped to 55.3 in September from 58.2 in August, which is an eight-month low.

The services activity index fell to a seven-month low of 54.6 in September from 57.2 in August.

Germany''s public debt rose 1.7% in the first six months of 2010 compared to the prior six month period, according to official figures released today. Statistics office Destatis said public debt totaled €1.7 trillion at the end of June.

Germany''s building industry orders decreased in July from the previous year. The total value of orders received by construction decreased 2.9% on an annual basis in July, the Federal Statistics Office said today. Building construction orders increased 4.5% on an annual basis, while civil and underground engineering orders decreased 9.1%.

French manufacturing confidence improved slightly to 98 in September, a key monthly survey showed, with industry leaders turning positive about future growth, according to Statistics office INSEE. The business climate index for the services sector rose to 99 in September from 98 in August.

The Markit France composite purchasing managers'' index fell to 58.5 in September from 59.5 in August, the lowest in six months. The services PMI dropped to 58.8 in September from 60.4 in August, weakest since March. The manufacturing PMI climbed to 55.4 in September from 55.1 in August, a four-month high.

Italy''s jobless rate increased in the second quarter from the previous three months period, the statistics office Istat said today. The jobless rate rose to 8.5% in the second quarter, compared with 8.4% in the previous quarter.

The Czech national bank decided to keep the benchmark two-week repo rate unchanged at 0.75%, the lowest on record. The central bank also retained its other interest rates. The discount rate was maintained at 0.25% and the Lombard rate was left unchanged at 1.75%.

Gainers & Losers

Adecco SA fell 1.27% to Sfr50.60 after the staffing company reported revenues continued to grow approximately 16% organically, excluding calendar volatility.

AB Electrolux dropped 1.48% to SEK159.50 after the Swedish household appliances maker said its President and Chief Executive Officer Hans Stråberg plans to leave the company. Stråberg will be succeeded by Keith McLoughlin as of January 1, 2011.

Iberia Lineas Aereas de Espana S.A. gained 0.46% to €2.83 after the airline operator decided not to exercise its right to cancel the merger contract with British Airways.

OncoMethylome Sciences SA tumbled 3.26% to €1.78 after the biotech company entered into an agreement with a subsidiary of GlaxoSmithKline plc for the potential use of one of its DNA methylation specific PCR biomarkers in GSK’s immunotherapy development program. Financial details of the deal were not disclosed.

Volkswagen AG declined 1.99% to €78.77 after the auto maker said it plans to invest $550 million to build a new engine plant in central Mexico.