1 March 2002, 15:50 OUTLOOK Euro zone data next week to show further improvement
LONDON (AFX) - Euro zone data in the coming week are expected to
show further improvement with higher readings in area-wide confidence
surveys and service sector PMIs on the cards, according to economists.
But despite the overall tone, some pockets of weakness are also
likely, especially in areas such as employment where lags are usual,
they added.
"Broad expectations are for business survey data released over the
next week to improve given the rise in the German Ifo and French INSEE
business survey," Kevin Gaynor, economist at UBS Warburg said.
The service sector PMIs are seen rising above the 50-point
threshold that marks expansion in all of Europe's major economies. In
January, the German reading remained below the 50-point cut off even
though the overall euro zone figure featured above that mark.
HSBC economists noted that the expectations component of the
January index had shot up to 66.3, indicating a strong rise in the
February headline figure.
"A further improvement seems likely in February," they wrote.
But not all the data will point to a rapid economic recovery in the
euro zone. Jobless numbers, for instance, are expected to continue
rising.
"We look for German February unemployment and euro area January
unemployment to rise," Gaynor at UBS Warburg said.
"With leading indicators of employment such as the Ifo employment
expectations and PMI for jobs continuing to deteriorate over the past
couple of months, it appears that the bottoming out of the German
business cycle has yet to impact the labour market," Jose Luis Alzola
at Schroder Salomon Smith Barney said.
However, the pace of the rises may soften, he said.
It may also be too early for a turnaround in German factory orders,
Gaynor at UBS Warburg said.
Overall, none of the week's data is likely to pressure the European
Central Bank into changing interest rates at its rate setting meeting
on Thursday March 7, economists said.
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