Eurozone Private Sector Growth Lowest In Over 4 Years
Eurozone private sector grew at the slowest pace in more than four years during December, suggesting that the 19-nation economy is set to end this year with a whimper.
The flash Composite purchasing managers’ index, or PMI, which combines manufacturing and services, fell to a 49-month low of 51.3 from 52.7 in November, survey data from IHS Markit showed. Economists had forecast a modest improvement in the index to 52.8.
A reading above 50 suggests growth in the private sector.
The flash manufacturing PMI for the euro area dropped to a 34-month low of 51.4 from 51.8 in November. Economists had expected the measure to remain unchanged.
The manufacturing output index, meanwhile, rose to a two-month high of 51 from 50.7 in November.
The flash services PMI eased to 51.4 from 53.4 in November. Economists had expected the reading to remain steady.
Stalled new business inflows, job creation at two-year low and weaker business optimism contributed to the downturn in December.
Inflationary pressures remained elevated, but eased. Input price inflation slowed to the weakest level since April and output price growth was the lowest since September.
The Yellow Vests or “gilets jaunes” anti-government protests in France and the weak demand for automobiles due to the implementation of the WLTP emissions test exacerbated the undercurrent of slowing economic growth, IHS Markit said.
“Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area,” IHS Markit economist Chris Williamson said.
“The surveys also point to further signs that the struggling autos sector continued to act as a drag on the region’s economy.”
“While GDP growth in the fourth quarter as a whole is indicated at almost 0.3 percent, the surveys point to quarterly GDP growth momentum slipping closer to 0.1 percent in December alone,” Williamson added.
Further, he said forward-looking indicators such as new orders and future expectations remain subdued, suggesting that demand growth is stalling, adding to downside risks to the immediate outlook.
Separate reports from IHS Markit showed that Germany’s private sector expanded at the slowest pace in four years during December amid slower growth in manufacturing and services.
France’s private sector contracted for the first time in two-and-a-half years in December with both manufacturing and services activities falling, amid widespread reports of disruption to business due to the ongoing Yellow Vests anti-government protests.
Elsewhere, Eurostat reported that Eurozone hourly labor costs annual growth rose to 2.5 percent in the third quarter from 2.3 percent in the second quarter.
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