PMI data for Europe sees highest level since 2011

February 27, 2017

Purchasing managers indices (PMI) in Europe hit their highest level since 2011 in February, reaching 56.0, from 54.4 in January. Any reading above 50 indicates expansion. The index has been climbing higher since mid-2016, indicating greater economic growth in the Eurozone is on the horizon. PMI’s are often used as a leading indicator. Rising PMI readings are now becoming common across the global economy, led by developed markets. Encouragingly, many emerging market countries are now also seeing readings consistently above 50 for the first time since 2015. While nothing is guaranteed, less lethargic economic growth may now be more likely.

 

Data from the British Banking Association (BBA) showed that borrowing by consumers continued to drive the UK economy in January. However, the rate of growth in unsecured credit card lending slowed for the third consecutive month. While low-interest rates have meant that consumers have been keener to borrow to finance consumption, these are signs that they may be beginning to run out of steam. While mortgage lending has continued to be robust, seeing steady growth, housing market activity remains subdued on a historical basis.

 

RBS reported a £7bn annual loss last week, as a result of continued suffering from PPI miss-selling as well as setting aside funds for potential conduct fines in the US. This is now the ninth year in a row that RBS has reported a loss and takes the accumulated figure to £58bn. However, the rest of the UK banking sector appears to be in much better shape. While banks continue to have margin pressure from historically low-interest rates, cost cutting and a simplification of business models have resulted in a return to profits and dividends. RBS remains 72% UK government owned following a £45.5bn bailout during the financial crisis.

 

Index Open Close Change % Change
FTSE 100 7299 7244 -55 -0.76%
S&P 500 2351 2367 16 0.68%
Dax 11757 11804 47 0.4%
Cac 40 4867 4845 -22 -0.46%
Nikkei 225 19234 19107 -127 -0.66%
UK 10 Year Gilt Yield 1.225 1.154 -0.071 -5.79%

 

German and Japanese unemployment data will be released on Wednesday and Thursday respectively along with the February manufacturing PMI for the US.