Euro Rate

Services sector boasts further growth

Ireland’s services sector expanded during March, as companies operating in the sector continue to benefit from a recovering economy. However, the sharp fall in the value of the euro during the month contributed to a significant rise in input costs.

According to the latest Services Purchasing Managers’ Index from Investec, March saw further growth in new orders, as the headline PMI reading of 60.9 demonstrates “clear and consistent strong growth”, bringing the current sequence of expansion to 32 consecutive months.

Philip O’Sullivan, chief economist, Investec Ireland, said that the latest survey reveals further expansion of activity in March.

“While the rate of growth implied by the headline PMI moderated for a third successive month to 60.9 (from 61.4 in February), it is consistent with a sharp rate of expansion, with the sequence of above-50 readings now extending to 32 successive months,” he said.

Irish services companies benefited from healthy demand from both domestic and overseas customers, according to Investec, with the New Orders index still well above the series average.

Employment across the services sector continues to be broad-based, Mr O’Sullivan said, with data for the four segments of the services industry – TMT, business services, financial services and travel & leisure -reporting simultaneous growth in headcounts for a sixteenth successive month.

However, the survey also revealed that the impact of the European Central Bank’s quantitative easing programme, aimed at stimulating growth in the euro zone, is somewhat of a double-edged sword. The fall in the value of the euro against Ireland’s largest trading partner, the UK, contributed to a sharp rise in input costs in March, but new orders also grew at a substantial pace with new business from abroad, in particular from the UK.

Looking ahead, Mr O’Sullivan noted that, despite recent slippage, the expectations index remains well above the series average, signalling that services firms remain upbeat on their prospects.

“A tangible sign of this is the ongoing rise in payrolls in the sector. Given these factors, we are confident that further encouraging Services PMI readings will be posted in the coming months.”

Meanwhile, euro zone business activity accelerated in March at its fastest pace for nearly a year as customers took advantage of ongoing price discounting to place new orders at a rate not seen since mid-2011, a survey found.

The upbeat survey will provide welcome news for the European Central Bank just weeks after it embarked on a trillion- euro asset-purchase programme to try and spur growth and inflation.

Markit’s final March Composite PMI, seen as a good indicator of growth, stood at 54.0, a touch below the preliminary estimate of 54.1 but well ahead of February’s 53.3. A reading above 50 implies growth.

“The PMIs are indicating somewhat sluggish GDP growth of 0.3 per cent for the first quarter. However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months,” said Chris Williamson, Markit’s chief economist.

A sub-index measuring new orders leapt to 54.1 from 52.5, its highest since May 2011. That suggests a healthier outlook although the survey also showed companies have now been cutting prices for three years, although not as sharply in March.

Euro zone business growth up as new orders pour in

Euro zone business activity accelerated in March at its fastest pace for nearly a year as customers took advantage of ongoing price discounting to place new orders at a rate not seen since mid-2011.

The upbeat survey will provide welcome news for the European Central Bank just weeks after it embarked on a trillion-euro asset-purchase programme to try and spur growth and inflation.

Markit’s final March Composite Purchasing Managers’ Index, seen as a good indicator of growth, stood at 54.0, a touch below the preliminary estimate of 54.1 but well ahead of February’s 53.3.

A reading above 50 implies growth.

“The PMIs are indicating somewhat sluggish GDP growth of 0.3% for the first quarter.

However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months,” said Chris Williamson, Markit’s chief economist.

Markit’s growth projection is slightly less than the 0.4% predicted in a Reuters poll taken last month.

A sub-index measuring new orders leapt to 54.1 from 52.5, its highest since May 2011.

That suggests a healthier outlook although the survey also showed companies have now been cutting prices for three years, although not as sharply in March.

Euro zone consumer prices fell again in March, as expected, but the decline was the smallest this year.

That price-cutting helped drive service industry activity up at its fastest pace in eight months. The March service sector PMI rose to 54.2 from 53.7, just below the flash 54.3 estimate.

With the recovery gathering steam and confidence growing because of the ECB’s QE programme, service companies were at their most optimistic since May 2011.

The business expectations sub-index came in at 64.8 compared with February’s 64.1.

“With the ECB’s policy of quantitative easing also set to provide a boost to the nascent recovery in coming months, the economic outlook is therefore brightening as we expect to see more upward revisions to growth forecasts for the year,” Williamson said.

Euro zone business growth accelerates as new orders pour in

By Jonathan Cable

LONDON, (Reuters) – Euro zone business activity accelerated in March at its fastest pace for nearly a year as customers took advantage of ongoing price discounting to place new orders at a rate not seen since mid-2011, a survey found.

The upbeat survey will provide welcome news for the European Central Bank just weeks after it embarked on a trillion-euro asset-purchase programme to try and spur growth and inflation.

Markit’s final March Composite Purchasing Managers’ Index (PMI), seen as a good indicator of growth, stood at 54.0, a touch below the preliminary estimate of 54.1 but well ahead of February’s 53.3. A reading above 50 implies growth.

“The PMIs are indicating somewhat sluggish GDP growth of 0.3 percent for the first quarter. However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months,” said Chris Williamson, Markit’s chief economist.

Markit’s growth projection is slightly less than the 0.4 percent predicted in a Reuters poll taken last month.

Euro zone consumer prices fell again in March, as expected, but the decline was the smallest this year.

That price-cutting helped drive service industry activity up at its fastest pace in eight months. The March service sector PMI rose to 54.2 from 53.7, just below the flash 54.3 estimate.

With the recovery gathering steam and confidence growing because of the ECB’s QE programme, service companies were at their most optimistic since May 2011. The business expectations sub-index came in at 64.8 compared with February’s 64.1.

Euro zone and U.S. manufacturing expand, China struggles

By Jonathan Cable and Caroline Valetkevitch

LONDON/NEW YORK (Reuters) – Euro zone businesses ramped up activity this month as the European Central Bank started printing money to spur economic growth, while a slowdown among Chinese factories fueled expectations of more monetary stimulus.

U.S. manufacturing activity growth also edged up despite a stronger U.S. dollar and the threat of an interest rate rise from the Federal Reserve later this year.

The Eurozone Composite Flash Purchasing Managers’ Index (PMI) from data vendor Markit, based on surveys of thousands of companies and seen as a good growth indicator, jumped to a near- four-year high of 54.1 from February’s 53.3.

The surveys pointed to first-quarter euro zone economic growth of 0.3 percent, Markit said, matching the previous three months’ but shy of the 0.4 percent median forecast in a Reuters poll taken earlier this month. [ECILT/EU]

The ECB began its quantitative easing program to buy bonds worth more than a trillion euros in March.

“I wouldn’t want to give QE too much credence at this stage. The ECB has only been buying for a couple of weeks and QE takes a long time to have any impact – if at all,” said Peter Dixon at Commerzbank. “The outright QE itself has had zero impact; growth was already happening.”

A sub-index measuring euro zone prices jumped to an eight-month high of 49.0. But it has spent three years below the break-even level of 50, suggesting inflation will not return any time soon.

Oil prices have tumbled over the past nine months and inflation rates across the world have followed suit.

European shares and the euro edged up after the surveys were published but the slowdown in China kept oil and commodities-linked assets under pressure. [MKTS/GLOB]

CHINA BRAKES

China’s flash HSBC/Markit PMI dipped to an 11-month low of 49.2 in March, below the 50 level that separates growth from contraction.

“The deteriorating PMI confirmed that downside risks to China’s 2015 growth have started to materialize. We expect an accelerated monetary easing cycle and somewhat loosening of the fiscal stance,” said Jian Chang at Barclays.

Some analysts expected China’s first-quarter economic growth to slip below the government’s new full-year target of 7.0 percent, widely seen as the level needed to keep employment steady.

China’s economic slowdown is stabilizing, with employment and services among the bright spots, Vice Premier Zhang Gaoli said on Sunday.

The country’s leaders have said they would be willing to tolerate somewhat slower growth as long as the labor market remained resilient. But the latest PMI employment sub-index contracted for a 17th straight month, hitting its lowest since the depths of the global financial crisis.

U.S. MANUFACTURING GROWTH AT FIVE-MONTH HIGH

Growth in the U.S. manufacturing sector edged up to a five- month high in March, according to Markit.

The preliminary U.S. Manufacturing Purchasing Managers’ Index rose to 55.3, its highest since October, when the final PMI was 55.9.

“Manufacturing regained further momentum from the slowdown seen at the turn of the year, with output, new orders and employment growth all accelerating in March,” said Chris Williamson, Markit’s chief economist.

The flash reading of the index measuring new orders also rose in March to the highest since October, coming in at 56.4, compared with February’s final reading of 55.8.

Employment growth also rose in March from February, Markit said.

(Corrects paragraph 15, subhead, to 5-month high from 4-month high for U.S. PMI)

(Additional reporting by Kevin Yao in Beijing; Editing by Jeremy Gaunt, Clive McKeef and Dan Grebler)

FOREX-Euro gains against dollar on robust PMI surveys

* Robust French, German PMIs help euro

* Fed’s Williams repeats mid-year rate rise may be appropriate

* Dollar still feeling impact of last week’s dovish Fed statement

* Aussie slips briefly after weak China flash HSBC PMI

By Ahmed Aboulenein

LONDON, March 24 (Reuters) – The euro rose for the third day running against the dollar on Tuesday, bolstered by better-than-expected euro zone business surveys that pointed to a broader recovery taking place in the currency bloc.

The dollar was under pressure, with investors awaiting consumer price inflation data later in the day. A softer number, as was registered earlier on Tuesday in Britain, could boost expectations that the Federal Reserve will be in no hurry to raise interest rates.

San Francisco Fed chief John Williams weighed in on the debate over the dollar’s gains, saying the U.S. economy could handle a stronger currency and pointing to the chance of an interest rate rise in June.

Other Federal Reserve officials, and new forecasts from the U.S. central bank, have cast doubt on how much more appreciation of the dollar the Fed will easily tolerate and raised speculation it will push back any tightening of monetary policy.

The euro was up 0.4 percent at $ 1.0984, having risen to $ 1.10 after the business surveys were released. In a sign the European Central Bank’s bond buying programme may already be paying dividends, the composite purchasing managers’ survey for the 19 members of the euro zone jumped to a near four-year high of 54.1 in March, well above forecasts.

“Any positive surprises from the euro area are further adding to this euro/dollar rally. However, we think this is temporary; we still believe in the dollar strength trend going into the second half of the year,” said Nikolaos Sgouropoulos, FX strategist at Barclays in London.

Many major bank strategists forecast the euro to fall close to parity with the dollar this year, but the pace of its dive to $ 1.05 earlier this month took many by surprise and prompted JP Morgan and HSBC to suggest the rally may be coming to an end.

“The bigger question of whether the economic recovery has any legs remains unanswered,” Societe Generale analysts said in a note.

“In the meantime, after breaking above key resistance at $ 1.0940 yesterday, the euro’s next technical target is $ 1.1070 and we’d be more interested in re-selling there than in looking for much follow-though from this morning’s initial weakness.”

The Swiss franc, meanwhile, rose to a three-week high against the dollar and a six-week peak versus the euro .

Against the yen, the dollar eased 0.3 percent to about 119.40 yen, near the bottom of its 122.04 yen to 119.29 yen range seen over the past couple of weeks.

(editing by John Stonestreet)

Euro Rises As German Private Sector Activity Hits 8-Month High

The euro strengthened against most major currencies in the early European session on Tuesday, after data showed that Germany’s private sector expanded at the strongest pace in eight months in March.

Data from Markit Economics showed that Germany’s composite Purchasing Managers’ Index rose to 55.3 from 53.8 in February. The growth has stretched to 23 months and the latest rate of expansion was the most marked since July last year.

The PMI for the service sector rose more-than-expected to a six-month high of 55.3 in March from 54.7 in February. The expected score was 55.

The manufacturing PMI came in at 52.4 versus 51.1 in February. The score was above the expected level of 51.5.

The currency showed little reaction to the Eurozone PMI data, that came after German PMI data.

Data from Markit Economics also showed that Eurozone private sector grew at the fastest pace in almost four years in March. The flash composite PMI rose more-than-expected to 54.1 in March from 53.3 in February. The index rose for the fourth consecutive month to reach the highest since May 2011. The reading stayed above the forecast of 53.6.

At 53.3, the average PMI reading for the first quarter was the highest since the second quarter of last year.

The services PMI came in at 54.3 in March, a 46-month high. Economists had forecast the index to rise to 53.9 from 53.7 in February.

Investors are also waiting for progress in Greece’s debt negotiations as Greek Prime Minister Alexis Tsipras meets leaders of Germany’s opposition Left and Green parties later today.

German chancellor Angela Merkel, who held face to face talks with Tsipras for the first time on Monday, said that Greece’s reform proposals would be evaluated by the finance ministers of the euro zone, rather than by Berlin alone.

In the early European session today, the euro rose to more than a 4-week high of 0.7351 against the pound, from an early low of 0.7302. If the euro extends its uptrend, it is likely to find resistance around the 0.76 area.

Against the U.S. and the Canadian dollars, the euro advanced to 6-day highs of 1.0999 and 1.3738 from early lows of 1.0903 and 1.3668, respectively. The euro is likely to find resistance around 1.15 against the greenback and 1.40 against the loonie.

Moving away from early lows of 130.48 against the yen and 1.4246 against the NZ dollar, the euro rose to a 6-day high of 131.40 and a 4-day high of 1.4353, respectively. The euro may test resistance near 136.02 against the yen and 1.49 against the kiwi.

The euro edged up to 1.3952 against the Australian dollar, from an early low of 1.3859. On the upside, 1.42 is seen as the next resistance level for the euro.

Looking ahead, U.S. CPI and new home sales for February, house price index for January and Markit’s manufacturing PMI for March are due in the New York session.

At 5:05 am ET, European Central Bank Vice President Vitor Constancio takes part in a panel discussion titled “The Future of International Monetary Policy and its Impact on Global Economic Recovery” at the International Financial Services Forum, in London. Subsequently, U.S. Federal Reserve Bank of St. Louis President James Bullard is also expected to participate in this panel discussion after an hour.

by RTT Staff Writer

For comments and feedback: [email protected]

Business News

Euro Down Against Dollar, Yen After Staging Rally

By Hiroyuki Kachi

The euro fell against the dollar and the yen in Asia trade Tuesday, with some traders adjusting positions after the currency staged a rally overnight.

Around 0450 GMT, the euro was at $ 1.0920 from $ 1.0946 late Monday in New York. That compares with a high of $ 1.0972 overnight but still below $ 1.1037 soon after the outcome of the Federal Open Market Committee last week.

The common currency was also at Y130.68 from Y131.07.

“After rising for no particular reason yesterday, (the euro) inevitably met with selling as it came closer to $ 1.10,” said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. Also investors are showing less of an appetite to buy the euro around Y131, he said added.

The single currency extended its recent rebound overnight after the Federal Reserve’s policy statement indicated it intends to proceed cautiously on interest-rate rises, much less aggressive than many had expected.

“It is natural to see a rebound to this extent” after the rapid pace of decline in recent sessions, said Mr. Sakai.

Federal Reserve Vice-Chairman Stanley Fischer said Monday the U.S. central bank remains on track to raise short-term rates this year.

Mr. Fischer said once rates begin to rise, they could easily move “up and down” depending on how the economy performs.

Over the near term, the euro may get a boost from short covering triggered by possible strength in eurozone PMI data later today, said Takuya Kawabata, analyst at Gaitame.Com Research Institute.

“If the pair manages to surpass the $ 1.10-mark, further gains are possible,” said Mr. Kawabata, who expects the pair to move in a $ 1.080-$ 1.1070 range Tuesday. But if U.S. inflation data also scheduled later today shows a stronger-than- expected pace of inflation, that may reignite hopes for an early U.S. rate increase that would bring about a return to the dollar buying.

Elsewhere, the Australian dollar briefly hit as low as Y93.85 after weak Chinese manufacturing activity data. The Aussie then stabilized at Y94.10 later in the session.

The preliminary gauge of Chinese manufacturing activity by HSBC Holdings PLC fell to 49.2 in March, from 50.7 in February. A figure below 50 indicates contraction.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.11% at 86.86.

 Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT                             Latest       Previous   %Chg    Daily    Daily   %Chg Dollar Rates                               Close            High      Low  12/31  USD/JPY Japan           119.70-71      119.72-73  -0.01   119.85   119.59  -0.01 EUR/USD Euro            1.0920-23      1.0945-48  -0.23   1.0968   1.0905  -9.73 GBP/USD U.K.            1.4940-45      1.4951-56  -0.07   1.4976   1.4921  -4.08 USD/CHF Switzerland     0.9679-83      0.9659-63  +0.21   0.9696   0.9646  -2.64 USD/CAD Canada          1.2528-33      1.2520-25  +0.06   1.2549   1.2504  +7.82 AUD/USD Australia       0.7856-60      0.7878-82  -0.28   0.7903   0.7839  -3.83 NZD/USD New Zealand     0.7649-55      0.7650-56  -0.01   0.7675   0.7628  -1.83  Euro Rate  EUR/JPY Japan           130.70-74      131.03-07  -0.25   131.20   130.62  -9.81 Source: ICAP PLC

Write to Hiroyuki Kachi at [email protected]

    (END) Dow Jones Newswires   03-24-150138ET   Copyright (c) 2015 Dow Jones & Company, Inc.

Weak euro boosts euro zone businesses

Euro zone business activity continued to expand in February, although at a slower rate than expected, according to a closely-watched survey of the region’s services and manufacturing sectors.

The final composite reading of Markit’s purchasing managers’ index (PMI) came in at 53.3 in February, slightly below a preliminary reading of 53.5.

However it marked a rise from January’s reading of 52.6, as a weaker euro continued to give businesses in the region a boost. The 50-point mark separates expansion from contraction.

The index’s findings come after data released earlier this week showed that deflation eased in the euro zone in February , as the 19-country region awaits the European Central Bank’s (ECB) quantitative easing (QE) program.

More From CNBC

CNBC.com News Page
CNBC.com Blogs Page
CNBC.com Earnings Central

Euro zone business growth picks up

Growth in euro zone business activity hit a seven-month high in February, following a pick-up in demand, according to a closely-watched survey released on Friday.

The flash composite reading of Markit’s purchasing managers’ index (PMI) came in at 53.5 this month, up from January’s 52.6 and above analyst forecasts. The composite measure includes activity in both the manufacturing and services sectors; a reading over 50 marks expansion, whereas one below indicates contraction.

“Growth of business activity has now accelerated for three successive months, having almost stalled back in November, driven higher by stronger demand,” Markit said in its release. “New orders also grew at the sharpest rate for seven months in February.”

The services sector drove February’s growth in business activity, with manufacturing expansion remaining relatively subdued.

The region-wide figure got a boost from two of the currency bloc’s biggest economies.

Germany’s composite reading ticked up in February, to 54.3 points from 53.5 points in January.

The reading for France, where economic growth has lagged that of its euro zone neighbors in recent months, also came in better than expected. Its composite PMI rose to 52.2 – the highest reading in three and a half years, and up from 49.3 in January.

Howard Archer, chief European economist at IHS Global Insight, described the figures as “genuinely encouraging.”

“There are mounting signs that euro zone economic activity really is now improving, which reinforces our frequently stated belief that growth will surprise on the upside in 2015,” he wrote in a note.

In the fourth quarter of 2014, economic growth in the region beat expectations but remained anemic, with the economy expanding by 0.3 percent.

Chris Williamson, chief economist at Markit, said the European Central Bank’s bond-buying program – which he described as a “bazooka” – had directly boosted business optimism in the region.

The European Central Bank’s (ECB) Governing Council announced the launch of a controversial government-bond-buying program , a policy known as quantitative easing, at its January meeting. One of the main aims of the scheme is to drag the euro zone out of growth-sapping deflation and back towards the ECB’s “just under 2 percent” target. Prices in the region fell by 0.6 percent year-on-year in January, after sliding into deflation for the time since 2009 in December.

However, separate figures published Friday revealed that German producer prices fell further in January, leading to increased fears that the region is heading towards a deflationary spiral.

– By CNBC’s Katrina Bishop

More From CNBC

CNBC.com News Page
CNBC.com Blogs Page
CNBC.com Earnings Central

Euro zone starts 2015 better than thought as firms slash prices – PMIs

By Jonathan Cable

LONDON (Reuters) – The euro zone economy began 2015 in better shape than expected but firms were forced to slash prices, surveys showed on Friday, a day after the European Central Bank announced a money-printing plan in a bid to revive inflation.

Firms across the continent have been cutting prices at the fastest rate in nearly five years this month, in a trend that backs up the ECB’s decision on Thursday to embark on a programme of quantitative easing.

Markit’s Eurozone Composite Flash Purchasing Managers’ Index, based on surveys of thousands of companies and seen as a good growth indicator, bounced to a five-month high of 52.2 from December’s 51.4.

That beat the forecast in a Reuters poll for a more modest rise to 51.8 and marked its 19th month above the 50 level that separates growth from contraction.

“We are moving away from the lows towards the end of last year, but the actual rate of growth being signalled is still moderate,” said Rob Dobson, senior economist at survey compiler Markit.

Dobson said the PMIs pointed to first-quarter growth of 0.2 percent, slightly worse than the 0.3 percent predicted in a Reuters poll last week.

But the index for prices charged slumped to 46.9, its lowest since February 2010, and comes after official data showed consumer prices fell 0.2 percent in December, the first negative print since the depths of the financial crisis in 2009.

That discounting helped drive the services PMI up to 52.3 from 51.6, beating forecasts for 52.0, while the factory PMI rose as expected to 51.0 from 50.6.

The PMI for Germany’s private sector was less than a point above November’s 17-month low and the downturn deepened in France, the bloc’s second-biggest economy.

Also casting a shadow over February’s outlook, demand for manufactured goods barely increased while service firms were only able to build up the smallest of order backlogs.

“I wouldn’t expect there to be a significant improvement in February. We might see growth continue to improve slowly but we are unlikely to see a significant upturn,” Dobson said.

(Editing by Hugh Lawson)