Eurozone Private Sector Growth Eases To 9-Month Low

The euro area private sector growth eased to a nine-month low in December, resuming a slowdown trend amid a resurgence of COVID-19 infections, survey results from IHS Markit showed on Wednesday.

The composite output index fell to 53.3 in December from 55.4 in November. The score was slightly below the flash 53.4.

The direction of growth differed by sector, with a slowdown in the Eurozone’s dominant services sector to blame for a weaker improvement at the composite level. At the same time, manufacturing upturn remained subdued relative to the 2021 average.

The services Purchasing Managers’ Index came in at 53.1, down from 55.9 in the previous month. The flash score was 53.3.

While difficulties in obtaining inputs was once again noted as a major headwind for manufacturers, a resurgence in the pandemic across the euro area was a considerable drag on activity and demand in the services sector.

“As euro area nations deal with the latest developments in the pandemic, it’s clear that risks to the economy are now greater as tighter restrictions to curb the spread of COVID-19 are more likely than they have been recently,” Joe Hayes, a senior economist at IHS Markit said.

The final composite PMIs for December confirmed that the Eurozone economy ended 2021 on a weak note, consistent with the assessment that GDP rose by only about 0.2 percent sequentially in the fourth quarter, Jack Allen-Reynolds, an economist at Capital Economics, said. They also suggest that price pressures remain intense.

Among member countries, slower rates of growth were seen in France, Spain and Italy, while the level of business activity in Germany was broadly stagnant over the month.

Germany’s recovery stalled at the end of the year as the faster rise in manufacturing output was offset by the decline in services activity.

The composite output index fell to 49.9 from 52.2 in November and was below the flash score of 50.0. The services PMI declined to 48.7 in December from 52.7 a month ago. The flash reading was 48.4.

France’s private sector continued to expand in December but it masked the notable divergences between the two contributing sectors. At 55.8 in December, the composite output index dropped from 56.1 in November but remained above the flash 55.6.

The services PMI slid to 57.0 from 57.4 in November. The flash score was 57.1. Nonetheless, the pace of expansion was the second-fastest since June.

Italy’s private sector expanded for the eleventh straight month in December. The composite PMI posted 54.7 in December, down from 57.6 in November. The services PMI dropped to 53.0 from 55.9 in the previous month.

Spain’s private sector economy expanded at its slowest rate in the past eight months in December. The composite output index declined to 55.4 from 58.3 a month ago. At the same time, the services PMI came in at 55.8, falling from 59.7 in November.

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