U.S. PMI data in focus
Eurozone PMI rose to 50.2 in January, driven by Germany’s rebound, while inflation pressures persist.

Eurozone PMI reached 50.2, led by Germany's rebound, while France remained in contraction.
The Bank of Japan raised its rate to 0.50%, the highest since 2008.
Eurozone PMI climbs to 50.2 as Germany’s economy rebounds
The Eurozone’s private sector edged back into growth territory in January, driven by a notable rebound in Germany, according to the latest PMI data. The PMI Composite rose to 50.2 from December’s 49.6, marking a five-month high and signaling modest expansion. Manufacturing PMI climbed to 46.1, its best reading in eight months, while services PMI eased slightly to 51.4 but remained in positive territory.
Germany was at the forefront of the region’s improvement, with its PMI Composite rising to 50.1 from 48.0—a seven-month high and a return to expansion. In contrast, France lagged, with its PMI Composite increasing marginally to 48.3 but remaining below the critical 50 threshold, indicating ongoing contraction.
The data is cautiously optimistic as the rebound in Germany’s private sector helped mitigate persistent weakness in France. While services showed steady growth, the drag from manufacturing lessened, signaling the potential for broader stabilization in the months ahead.
Inflationary pressures, however, continue to loom. Manufacturing input costs rose for the first time in four months, fueled by a weaker euro and the implementation of Germany’s higher CO2 tax. In the services sector, wage-driven cost inflation remained elevated, with selling prices continuing to rise.
UK PMI edges higher to 50.9 amid stagflation concerns
The UK’s economic activity expanded slightly in January, with the PMI Composite ticking up to 50.9 from 50.4. Manufacturing PMI improved to 48.2 from 47.0, while services PMI edged higher to 51.2 from 51.1. Despite these gains, underlying economic weaknesses and inflationary pressures continue to weigh on the outlook.
Businesses are shedding jobs at the fastest pace since the 2009 global financial crisis, driven by falling sales and subdued demand. Business sentiment hit a two-year low, signaling a challenging environment for growth across sectors.
Inflationary pressures have resurged, adding to concerns of a stagflationary scenario. This complicates the Bank of England’s policy path as it grapples with weak growth and persistent inflation risks.
Bank of Japan delivers rate hike, raises inflation projections
The Bank of Japan (BoJ) raised its key interest rate by 25 basis points to 0.50%, the highest level since 2008, in a widely anticipated move. The decision, made by an 8-1 vote, faced dissent from board member Nakamura Toyoaki, who called for a delay until March.
Updated economic projections revealed a sharp upward revision to the BoJ’s inflation outlook. Core CPI is now expected to rise to 2.4% in fiscal 2025, up from 1.9%, while core-core CPI (excluding energy and fresh food) is forecast to hit 2.1% in the same period.
At a post-meeting press conference, Governor Kazuo Ueda emphasized a measured approach to policy changes, noting that the rise in underlying inflation remains moderate. He reiterated there is no “preset timeline” for future rate adjustments and highlighted the neutral rate range of 1%-2.5%, suggesting more hikes may follow.
Meanwhile, Japan’s inflation data underscored mounting price pressures. Core CPI (excluding food) accelerated to 3.0% year-on-year in December, its highest in 16 months, while headline CPI surged to 3.6%.