EMU: Services PMI revised slightly higher

The October final services PMI was slightly revised higher to 54.8 from a preliminary 54.6, and up from 54.2 in September. The details were positive too, as employment edged up to 55.6 from 55 previously, new business increased to 55.6 from 54.2 in September and outstanding business rose to 52.7 from 51.5. The report contained no big surprises versus the preliminary report. Of course, the rebound is a positive, but it remains to be seen whether it is more than an expression of temporarily volatility. In this respect, the figures in the next months will be interesting.

September EMU retail sales were up very moderately in September at 0.3% M/M and 1.6% Y/Y, falling shy of expectations for a 0.6% M/M increase, and following a flat M/M and 0.8% Y/Y figure in August. The release is outdated and not very reliable.

German factory orders fell unexpectedly sharply in September, -2.5% M/M and up 1.1% Y/Y, following an upwardly revised 1.9% M/M and 4.5% Y/Y gain in August. The weakness was broadly based sector-wise (capital, intermediate and consumer goods) and geographically (domestic and foreign, especially non-EMU). The Economy Ministry said that fewer big-ticket items were responsible for the weakness, but the trend is still pointing up. The series is volatile (but nevertheless down 1.7% Q/Q), but tentatively we might have seen some impact of the strong euro (and of higher energy prices).