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Growth in German service sector offsets manufacturing weakness

Friday, Oct 23 2015
Flash Germany Manufacturing PMI fell to 51.6 from 52.3 in September, 5-month low, while Flash Germany Services Activity Index rose to 55.2 from 54.1 in September, 7-month high. Figures were in line with market predictions. October’s PMI results paint a fairly passive picture of the health of the German private sector economy at the start of the final quarter of 2015. Companies signalled a slight acceleration of output growth and were able to secure new contracts despite raising their charges to the greatest extent in 21 months.  
 
However, much of the strength was attributed to the service sector, where companies enjoyed the strongest rise in business activity for seven months. Meanwhile, today’s numbers signal a note of caution for German manufacturers. Output and new orders increased at weaker rates, with some companies explicitly mentioning ongoing uncertainties stemming from the Russian sanctions. Moreover, the combination of rising stocks of finished goods levels and slower new order growth suggests that companies may scale down their production in coming months.
 
Euro is currently being trade around 1.11 area. Pair is likely to find support around 1.1070 level and resistance above 1.1160 area. There will be no major data releases later in the session.
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