Eurozone Private Sector Closer To Stabilization

The euro area private sector moved close to stabilization in December as stronger manufacturing output growth helped to counter a further drop in service sector activity, flash survey results from IHS Markit showed Wednesday.

The composite output index advanced more-than-expected to 49.8 in December from 45.3 in the previous month. The expected level was 45.8.

The survey revealed that the economic impact of the second waves of virus infections has been far less severe than the first wave.

At 47.3, the services Purchasing Managers’ Index reached a three-month high, from 41.7 a month ago and above consensus forecast of 41.9. However, the reading was below the neutral 50.0.

The manufacturing PMI climbed to 55.5 in December from 53.8 a month ago. The expected score was 53.0.

The survey showed that inflows of new orders rose marginally and for the first time since September. Nonetheless, employment decreased across the eurozone as a whole for a tenth consecutive month.

Driven by encouraging news on the development of Covid-19 vaccines, business expectations about output in the coming 12 months rose to the highest since April 2018.

Average rates charged for goods and services meanwhile fell at the slowest rate since prices began falling back in March.

Germany reported an expansion of output for the sixth successive month in December. The strength in manufacturing continued to offset service sector weakness.

The flash composite output index grew unexpectedly to 52.5 from 51.7 in November. The reading was forecast to fall to 50.4.

The services PMI came in at 47.7, up from 46.0 a month ago and above the consensus forecast of 44.0. Likewise, the manufacturing PMI advanced to 58.6 from 57.8 in November. The score was seen at 56.4.

Despite strict Covid-19 lockdown restrictions, the French private sector logged a softer decline in December. The flash composite output index improved to 49.6 from 40.6 in November. The expected score was 42.9.

Service providers registered a substantially slower reduction compared to November’s six-month record. Meanwhile, manufacturers posted a fresh expansion in output.

The services PMI moved up to 49.2 from 38.8 a month ago. The reading was also well above economists’ forecast of 40.0.

At the same time, the manufacturing PMI came in at 51.1 versus 49.6 in the prior month and 50.1 expected by economists.

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