Eurozone Private Sector Growth Eases To 9-Month Low

Eurozone private sector growth eased to a nine-month low at the end of the year as rising coronavirus infection rates hit service sector activity, offsetting improved manufacturing growth, flash survey results from IHS Markit showed on Thursday.

The flash composite output index came in at 53.4 in December, down from 55.4 in November. The reading was also below the expected level of 54.0. Nonetheless, a score above 50.0 indicates expansion.

“The eurozone economy is being dealt yet another blow from COVID-19, with rising infection levels dampening growth in the service sector in particular to result in a disappointing end to 2021,” Chris Williamson, chief business economist at IHS Markit said.

“Looking ahead, the Omicron variant poses further downside risks to the growth outlook as we head into 2022, and any accompanying disruption to supply chains could result in price pressures spiking higher again,” Williamson added.

The December slowdown was led by the service sector, where business activity grew at the weakest rate since April. The services Purchasing Managers’ Index dropped to 53.3 from 55.9 in the prior month. The reading was forecast to drop to 54.1.

At 58.0, the manufacturing PMI reached a 10-month low, from 58.4 in November. The expected score was 57.8.

By country, growth stalled in Germany due to the first drop in new orders for goods and services since June 2020, ending a 17-month recovery.

Germany’s flash composite output index declined to 50.0 in December from 52.2 in the previous month. The score was forecast to fall moderately to 51.0.

Services activity came under renewed pressure in December from the fourth wave of coronavirus and associated restrictions. At 48.4, the flash services PMI fell to a 10-month low from 52.7 a month ago.

Meanwhile, the manufacturing PMI rose to a three-month high of 57.9 from 57.4 in the previous month.

On the other hand, France continued to grow at a solid pace, albeit down on November. The flash composite output index fell to 55.6 in December from 56.1 in the previous month. But the reading was above the economists’ forecast of 53.6.

The manufacturing PMI came in at 54.9 in December, down from 55.9 a month ago. Economists had forecast the index to drop further to 53.0.

The services PMI slid less-than-expected to 57.1 from 57.4 in November. The expected reading was 56.0.

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