Purchasing managers in the EMU are cautiously optimistic

At first glance, the mood among purchasing managers remains subdued at the beginning of the new year 2020 according to the survey by IHS Markit in the euro zone. The comprehensive composite purchasing managers' index on the situation in industry and services remained at the previous month's level of 50.9 points in January according to the preliminary publication.

In detail, however, the business outlook is brightening, probably also due to the initial de-escalation in the Pacific trade dispute. Another ray of hope is the development of incoming orders, which the purchasing managers surveyed are no longer as pessimistic as in previous months.

At least for the rest of the year, this gives reason to hope that the economy in the euro zone has put the worst behind it and is continuing to stabilize. It is true that the dichotomy between weak industry on the one hand and a service sector, which is the main driver of growth, on the other, will remain. But the declines in industry are losing their sharpness. Orders and production are stabilizing at a low level. The results of the purchasing managers' survey in the euro zone support our economic picture of a stabilisation of growth in the first half of the year and slightly higher economic momentum in the second half of 2020.

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