Italy’s manufacturing sector ended 2015 growing at the fastest rate since early-2011. December saw sharp and accelerated increases in both production and new orders, while the pace of job creation picked up to a five-month high. Producer prices meanwhile rose for the first time in four months, although only marginally as input costs continued to retreat. The headline Markit/ADACI Italy Manufacturing Purchasing Managers’ Index climbed from 54.9 in November to 55.6 in the final month of the year, its highest reading since March 2011. Analysts were predicting no change.

 

Tuesday's session brought Spanish and German Unemployment Change figures as well as Eurozone CPI data. The number of unemployed in Spain registered at the offices of the Public Employment Services in December decreased by 55,790 persons, above expectations on decrease by 52,600. Thus, unemployment has four consecutive years of decline in this month. In the past 12 months, registered unemployment has decreased by 354,203 people, the biggest decline in a year of historical series. Separate report on German Unemployment showed decline by 14,000, also beating forecasts on decrease by 7,000.

 

Euro area annual inflation is expected to be 0.2% in December 2015, stable compared to November 2015, according to a flash estimate from Eurostat, the statistical office of the European Union. However, analysts were anticipating 0.4% increase. Core CPI also remained unchanged at 0.9%. Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in December (1.2%, compared with 1.5% in November), followed by services (1.1%, compared with 1.2% in November), non-energy industrial goods (0.5%, stable compared with November) and energy (-5.9%, compared with -7.3% in November).

 

Wednesday's session was marked by Spanish and Italian Services PMI data. The Spanish service sector carried on the trend of sharp growth of activity seen throughout 2015 in December, despite the rate of expansion easing from November. Moreover, business sentiment picked up to an eight-month high. Slower, but still solid increases were seen with regards to new business and employment. Meanwhile, the rate of cost inflation remained relatively muted and companies lowered their output prices. The headline seasonally adjusted Business Activity Index dipped to 55.1 in December from 56.7 in November, but still signalled a marked monthly rise in activity at services companies. Analysts were predicting incline to 56.9.

 

Italy’s service sector businesses recorded an upturn in growth at the end of the year, with both total activity and inflows of new business increasing at faster rates. The pace of job creation meanwhile picked up to an eight-month high, supported by improved confidence towards the year-ahead outlook for activity. Average prices charged fell marginally, despite input costs faced by businesses rising at a faster rate. Index rose to 55.3, from 53.4, beating forecasts on an incline to 53.8.

 

Thursday's session brought Eurozone Unemployment Rate data. The euro area (EA19) seasonally-adjusted unemployment rate was 10.5% in November 2015, down from 10.6% in October 2015, and from 11.5% in November 2014. This is the lowest rate recorded in the euro area since October 2011. The EU28 unemployment rate was 9.1% in November 2015, down from 9.2% in October 2015, and from 10.0% in November 2014. This is the lowest rate recorded in the EU28 since July 2009.

 

This week markets will be looking at:

 

Industrial Production (Wednesday 11:00)