Eurozone slips further despite German boom

Ben Southwood
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EUROZONE output declined again in January, according to business survey data released yesterday.

The bloc’s purchasing managers’ index (PMI) rose to 48.6, Markit said, from 47.8 in December

– another month of retrenchment, as indicated by the below-50 score.

This improvement in the index level came mostly from a resurgent Germany, which posted a 19-month PMI high of 54.4, up from 50.3, indicating growth across the Eurozone largest economy.

But the performance of France – which suffered a catastrophic fall in its PMI from 44.6 to a 46-month low of 42.7 – suggested GDP could do a lot worse than stay flat.

“Growth is heavily skewed towards Germany, where the contrast with the contraction seen in France is the greatest seen since the survey began in 1998,” said Markit’s chief economist Chris Williamson.

He pointed out that even Italy and Spain’s PMIs of 45.4 and 46.5 beat France’s lacklustre performance.

But Williamson took an optimistic approach to the data overall, saying the smaller fall in output suggested the Eurozone’s troubles were “easing sharply” and the bloc was “showing clear signs of healing”.

However, retail sales data, also released yesterday, this time by Eurostat, gave a gloomier picture of the zone’s prospects. The seasonally adjusted volume of sales was down 0.8 per cent between November and December, capping off a 3.4 per cent annual decline.