Italy’s service sector saw a drop in business activity and jobs in January, while Germany and France also suffered as the Eurozone’s economic woes continued.
Business activity in the Italian services sector fell as international demand declined for seventh consecutive month.
The pace of new order growth eased from December, just above November’s 45-month low, while employment fell for the first time since September.
Across the Eurozone, services output declined to its lowest level in five-and-a-half years.
Italian firms said they had reduced their payrolls as a result of softer demand and a drop in business activity.
It comes after Italy officially slipped into recession at the end of 2018, following two consecutive quarters in which its economy contracted.
The IHS Markit Purchasing Managers’ Index (PMI) for January suggested a recovery was not on the horizon any time soon.
Sentiment among Italy’s service providers also soften to the weakest in five months, which just 35 per cent confident of a rise in business activity in twelve months’ time.
IHS Markit economist Amritpal Virdee said: “Overall, the PMI data shows an Italian economy that is undergoing a sustained slowdown.
“This bodes ill for the rest of 2019 as the Italian government tries to stimulate economic growth.”
Eurozone powerhouse Germany showed some signs of a recovery, as business activity growth in its service sector accelerated for the first time in four months and confidence also climbed from recent lows in December.
However, job creation and the rate of new order growth slowed.
The survey revealed that the hotels and restaurants, transport and storage, health and education sectors all suffered a contraction in January.
Overall domestic demand continued to rise but inflows of business from abroad declined more rapidly.
The single currency bloc’s troubles were worsened by France’s services sector index.
Service providers reported a second successive contraction in January, with business activity declined at the quickest pace in almost five years, led by the sharpest fall in new overseas work since November 2016.
Employment growth eased to its slowest rate in two years and outstanding business fell for the first time in 35 months.
Chief business economist at IHS Markit Chris Williamson said: “The Eurozone has started 2019 on a flat note, with growth close to stagnation amid falling demand for goods and services.”
He added: “What started as a manufacturing and export-led slowdown has shown increasing signs of infecting the service sector.”