The Eurozone’s economic landscape showed promising signs of recovery in October, as the Composite Purchasing Managers’ Index (PMI) rose to 52.2, up from 51.2 in September. That’s the best reading of this figure in 17 months and shows widespread expansion in economic activity throughout the region. At the same time, Germany has done so much to drive this growth. Its Composite PMI jumped to 53.8, from 52.0, the highest in almost two and a half years.
Germany’s economic momentum picked up, and at the opposite end of the scale. This increase was largely driven by the services sector, a star performer throughout the national recovery. In contrast, France’s business activity remained under pressure, contracting for a fourteenth straight month. This divergence is a clear reflection of the dual economic nature of the Eurozone. At the forefront of this expansion is Germany, and playing a game of catch-up is France.
According to the latest PMI data, new orders across the Eurozone soared at their fastest pace in two-and-a-half years. This bodes well for broader economic activity in the months ahead. This healthy increase in new orders signals an increase in demand and confidence from businesses, adding to the narrative of the Eurozone’s recovery.
The Swiss National Bank (SNB) held its policy rate at 0%. This decision represents their resolve to stay the course on the monetary policy as long as economic conditions remain volatile. The SNB remains extremely watchful and prepared to intervene in the foreign exchange industry. If the CHF surges too high, they will step in as required. In fact, data from last week showed that the CHF rose against all of the G10 currencies. This has led officials to worry how this will impact export competitiveness.
The SNB anticipates inflation to remain within a consistent range that promotes long-term price stability. This even more severely rosy outlook is extrapolated over the next three years. This sober approach will be critical to ensuring continued economic stability while providing space for growth as the global economic picture remains unclear.
The single currency Euro (EUR) was mixed this Wednesday at a modest manner against other major currencies. It increased by 0.16% measured in USD, 0.08% measured in GBP, 0.11% measured in JPY, 0.30% measured in CAD and 0.06% measured in CHF. These recent fluctuations are a reminder that currency markets continue to readjust as investors react to economic data and central bank policy.