• Eurozone Manufacturing PMI arrives at 48.8 in January vs. 48.5 expected.
• Bloc’s Services PMI rises to 50.7 in January vs. 50.2 expected.
• EUR/USD defends mild gains near 1.0870 on the upbeat Eurozone PMIs.

The Eurozone manufacturing sector downturn eased further in January, the latest manufacturing activity survey from S&P Global research showed on Tuesday.

The Eurozone Manufacturing purchasing managers index (PMI) arrived at 48.8 in January vs. 48.5 expectations and 47.8 last. The index reached a five-month top.

The bloc’s Services PMI stood at 50.7 in January vs. 50.2 expected and December’s 49.8, hitting a six-month high.

The S&P Global Eurozone PMI Composite climbed sharply to 50.2 in January vs. 49.8 estimated and 49.3 previous. The gauge recorded a new seven-month high.

Comments from Chris Williamson, Chief Business Economist at S&P Global

“A steadying of the eurozone economy at the start of the years adds to evidence that the region might escape recession. The survey suggests that a nadir was reached back in October since when fears over the energy market in particular have been alleviated by falling prices, helped by the warmer than usual weather and generous government assistance.”

“At the same time, supply chain stress has eased, benefitting producers most notably in Germany, and more recently the reopening of the Chinese economy has helped to restore confidence in the broader global economic outlook for 2023, propelling business optimism sharply higher.”

FX implications

EUR/USD keeps its range below the 1.0900 level, with the downside cushioned by the upbeat euro area PMIs. The spot is adding 0.08% on the day.