Eurozone December final services PMI 53.1 vs 53.3 prelim


  • Composite PMI 53.3 vs 53.4 prelim

Euro area economic growth stumbled in December as the pandemic flares up, largely weighed down by Germany. The region’s biggest economy saw activity slump to its lowest in 18 months amid a surge of COVID-19 infections and tighter restrictions.

The downturn in the services sector is what stands out last month, with price pressures continuing to stay more elevated heading into the new year. On the latter, that reaffirms the notion that inflation is not likely to abate any time soon. Markit notes that:

“The accelerated expansion in output we saw in
November unfortunately turned out to be brief. Amid
a resurgence of COVID-19 infections across the
euro area, growth slowed to the weakest since
March in December. In Germany, where measures
to combat COVID-19 have been more stringent than
other monitored euro area countries, levels of
economic activity broadly stagnated in December.
Nonetheless, slower growth was seen across the
board.

“The spread of the Omicron variant had a particularly
profound impact on the services sector, reflecting
renewed hesitancy among customers due to the
novel strain of the virus. Looser travel restrictions in
recent months had facilitated greater levels of
tourism, which in turn provided additional support to
the eurozone service sector. However, this was
withdrawn in December as overseas demand
declined for the first time since May.

“There was also little to cheer with regards to
inflation. Although there was a marginal easing of
price pressures, we’re still in excessively hot territory
– increases in both input and output costs were the
second-quickest on record.

“As euro area nations deal with the latest
developments in the pandemic, it’s clear that risks to
the economy are now greater as tighter restrictions
to curb the spread of COVID-19 are more likely than
they have been recently.”



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