Analysts at Danske Bank explained that after two weeks of central bank action, focus will likely turn to the real economy, starting with the PMI and the Ifo. They point out it will be interesting to see if the service sector can continue to support growth despite the weakness in manufacturing.
Key Quotes:
“In the euro area, the most important data release next week is the PMI figures for the euro area and Germany on Monday. Last month, the manufacturing PMIs ticked up in both the euro area and Germany. However, both remain two-speed economies, with the service sectors shielding growth from the weak manufacturing sectors. With new orders improving slightly in August, we expect the manufacturing PMI to remain broadly stable at 47.0 in September. However, we see downside potential for the service print after the drop in business expectations last month and expect it to decline to 53.0.”
“On Tuesday, we get German Ifo prints for September. Both the expectations and current situation component have been on a falling trend for the last year, but we expect to see some stabilization this month in line with the uptick we got in the ZEW expectations last week.”
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