The Eurozone’s economy is stuck in its worst spell in six years, economists warned today, after it failed to gain momentum at the close of 2019.
Output barely increased in December, registering a score of just 50.6 on IHS Markit’s Flash Eurozone purchasing managers’ index (PMI) Composite Output Index today. Anything below 50 represents a contraction.
While services sector figures in the Eurozone PMI hit as four-month high at 52.4, manufacturing’s recession deepened over the month. It fell from 47.4 in November to 45.9, a two-month low, as output fgell at its fastest rate since October 2012 .
That saw manufacturing sink to its 11th straight month of decline, chiefly thanks to German factories’ malaise.
“The Eurozone economy closes out 2019 mired in its worst spell since 2013, with businesses struggling against the headwinds of near-stagnant demand and gloomy prospects for the year ahead,” IHS Markit’s chief business economist, Chris Williamson, said.
“New order growth remains largely stalled and job creation has almost ground to a halt, down to its lowest for over five years as companies seek to reduce overheads in the weak trading environment and uncertain outlook.”
He warned that if the job market worsens, manufacturing’s weak period could spill over into the services sector too, in a dramatic flash Eurozone PMI.
Germany saw business activity fall for a fourth month in a row while factory production sank at one of its sharpest rates in seven years.
While business optimism rose to its highest point since 2012 in Germany, France countered the country’s poor figures with better stats of its own.
France enjoyed a ninth consecutive month of gains in business activity so hit the best quarter it has had all year, though manufacturing production almost stalled.
“Germany’s steep manufacturing downturn has added to the chance of its economy contracting slightly in the fourth quarter, but France is enjoying a more resilient performance, providing a key area of support to help keep the eurozone growing,” Williamson added.