News Release - Markit Economics

News Release Purchasing Managers’ Index® MARKET SENSITIVE INFORMATION EMBARGOED UNTIL 1000 (CET) / 0900 (UTC) January 22 2016

Markit Flash Eurozone PMI

®

Eurozone growth cools at start of 2016 (1)

at

(2)

at

 Flash Eurozone PMI Composite Output Index 53.5 (54.3 in December). 11-month low.  Flash Eurozone Services PMI Activity Index 53.6 (54.2 in December). 12-month low.  Flash Eurozone Manufacturing PMI (53.2 in December). 3-month low.

(3)

Markit Eurozone PMI and GDP

at 52.3 (4)

 Flash Eurozone Manufacturing PMI Output Index at 53.2 (54.5 in December). 11-month low. Data collected January 12-21.

The eurozone economy saw growth slacken to the weakest for almost a year in January, according to the first business survey reports for 2016. There was better news on the labour market – improved business confidence and a rise in backlogs of uncompleted work meant employment growth held steady at the four-and-a-half-year high seen in December. Firms also enjoyed cost savings due to the oil price decline, passing these on to customers. ®

The Markit Eurozone PMI fell from 54.3 in December to 53.5 in January, according to the preliminary ‘flash’ estimate. Although the latest reading signalled a further solid upturn in business activity, the increase was the weakest since February of last year. The ongoing upturn was led by the service sector, despite its pace of expansion hitting a 12-month low. Growth of manufacturing output meanwhile also faltered slightly to reach an 11-month low, though remained only marginally below the average seen last year. Further order book growth in both sectors meant backlogs of uncompleted work showed the largest monthly increase for just over four-and-a-half years, prompting firms to continue boosting employment at a rate equal to the four-and-a-half year high seen at the end of 2015.

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The service sector created new jobs at a pace beaten only once since 2008, and the manufacturing sector maintained the robust rate of hiring seen late last year. The improved hiring trend could be linked to an upturn in business confidence, with expectations of future activity levels in the service sector hitting the highest since May 2011. Firms also benefitted from lower oil prices, which proved a key contributor to average input costs across the two sectors holding steady for the first time in a year. Manufacturers’ input prices showed the second-largest decline since July 2009, while service sector input cost inflation slowed to an 11month low. Cost savings allowed firms to cut average prices charged to customers for both goods and services, with the overall drop in output prices the largest recorded for ten months. German growth slowed to a three-month low, easing across both manufacturing and services, though the single currency area’s largest member state continued to act as a major source of growth

© Markit 2016

for the region as a whole. Although dipping compared to December, the rate of job creation in Germany remained especially strong, and the second-highest seen for just over four years.

Core v. Periphery PMI Output Indices

France, in contrast, saw business activity grow only modestly, improving only slightly on the nearstalling seen in December. A return to modest growth in the service sector was countered by a stagnation of manufacturing output, which failed to rise for the first time since last August. On a brighter note, employment in France saw the first rise for seven months. The rest of the region also continued to enjoy strong output and employment growth, though at slightly slower rates of expansion than the peaks seen late last year. Commenting on the flash PMI data, Williamson, Chief Economist at Markit said:

Core v. Periphery PMI Employment Indices

Chris

“The cooling in the pace of growth in euro area business activity at the start of 2016 is a disappointment but not surprising given the uncertainty caused by the financial market volatility seen so far this year. “It would be wrong to get too worried. The survey data are consistent with GDP rising at a steady quarterly rate of 0.3-0.4% at the start of the year. Firms also appear to be looking to brighter times ahead, with business confidence improving, linked in turn to backlogs of work rising at the fastest rate since the spring of 2011. With plenty of orders-inhand to work through, hiring remained encouragingly resilient at the start of the year. “Discounting, linked to the 15% drop in oil prices in the survey period compared to a month ago, will also help boost sales, especially as the fall in households’ fuel bills should free up more income to spend on other goods and services.” -Ends-

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© Markit 2016

Output

Summary of January data Output

New Orders

Composite

Output growth weakest since February 2015.

Services

Services growth slowest for a year.

Manufacturing

Output growth at 11-month low.

Composite

New business growth eases to four-month low.

Services

Growth in services new business slowest since September.

Manufacturing

Manufacturing new order growth at four-month low.

Backlogs of Work Composite

Employment

Input Prices

Output Prices

PMI(3)

New business

Outstanding business rises at fastest rate since May 2011.

Services

Incomplete business grows at strongest pace since May 2011.

Manufacturing

Backlogs rise for ninth month running.

Composite

Employment growth unchanged from December’s 55-month high.

Services

Rate of job creation jointfastest since November 2010.

Manufacturing

Jobs increase for seventeenth consecutive month.

Composite

Input prices unchanged since December.

Services

Input prices rise at moderate rate.

Manufacturing

Input prices fall at fastest rate since January 2015.

Composite

Charges decline for fourth month running.

Services

Service providers cut charges at marginal rate.

Manufacturing

Factory gate prices fall at sharpest pace in a year.

Manufacturing

Manufacturing PMI falls three-month low of 52.3.

Employment

Input prices

to

Output prices

Source: Markit.

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© Markit 2016

For further information, please contact: Markit Chris Williamson, Chief Economist Telephone +44-20-7260-2329 Mobile +44-779-555-5061 Email [email protected]

Rob Dobson, Senior Economist Telephone +44-1491-461-095 Mobile +44-782-691-3863 Email [email protected]

Joanna Vickers, Corporate Communications Telephone +44207 260 2234 E-mail [email protected] Note to Editors: Final January data are published on February 1 for manufacturing and February 3 for services and composite indicators. The Eurozone PMI® (Purchasing Managers' Index®) is produced by Markit and is based on original survey data collected from a representative panel of around 5,000 companies based in the euro area manufacturing and service sectors. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The flash estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data. The average differences between the flash and final PMI index values (final minus flash) since comparisons were first available in January 2006 are as follows (differences in absolute terms provide the better indication of true variation while average differences provide a better indication of any bias): Average Average difference Index difference in absolute terms Eurozone Composite Output Index1 0.0 0.2 Eurozone Manufacturing PMI3 0.0 0.2 Eurozone Services Business Activity Index2 0.1 0.3 The Purchasing Managers’ Index® (PMI®) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI® surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact [email protected]. Notes 1. The Composite Output PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index. 2. The Services Business Activity Index is the direct equivalent of the Manufacturing Output Index, based on the survey question “Is the level of business activity at your company higher, the same or lower than one month ago?” 3. The Manufacturing PMI is a composite index based on a weighted combination of the following five survey variables (weights shown in brackets): new orders (0.3); output (0.25); employment (0.2); suppliers’ delivery times (0.15); stocks of materials purchased (0.1). The delivery times index is inverted. 4. The Manufacturing Output Index is based on the survey question “Is the level of production/output at your company higher, the same or lower than one month ago?”

About Markit Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ over 4,000 people in 11 countries. Markit shares are listed on Nasdaq under the symbol MRKT. For more information, please see www.markit.com. About PMI Purchasing Managers’ Index® (PMI®) surveys are now available for over 30 countries and also for key regions including the eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics. The intellectual property rights to the Markit Eurozone Flash PMI® provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or ® ® consequential damages, arising out of the use of the data. Purchasing Managers' Index and PMI are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. Markit is a registered trade mark of Markit Group Limited.

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© Markit 2016