Eurozone Private Sector Logs Further Contraction
The euro area private sector contracted further in January amid
the Covid-19 pandemic as the decline in services was only partially
offset by the growth in manufacturing sector, final survey results
from IHS Markit showed on Wednesday.
The final composite output index dropped to 47.8 in January from
49.1 in the previous month but was above the flash score of
A contraction of GDP looks likely in the first quarter, though
on current trends this should be moderate in comparison to the
falls seen in the first half of 2020, Chris Williamson, chief
business economist at IHS Markit said.
The service sector was once again the main drag on the economy,
with activity contracting for a fifth successive month. Meanwhile,
manufacturing remained a bright spot, with production rising for a
seventh successive month.
At 45.4, the services Purchasing Managers' Index was down from
December's 46.4 but above the flash 45.0.
Of the largest euro area economies, only Germany recorded a rise
in private sector output at the start of the year, although growth
weakened to its lowest level for seven months.
All other nations recorded a contraction in activity. Solid
falls were seen in France and Italy, while inclement weather in
Spain exacerbated the effects of local restrictions designed to
deal with the pandemic.
Due to slower service sector activity and a slowdown in
manufacturing output growth, Germany's composite output index
slipped to a seven-month low of 50.8, as initially estimated, from
52.0 in December.
The service sector contracted for the fourth straight month in
January. The PMI fell to 46.7 from 47.0 in December. The
preliminary reading was 46.8.
France's composite output index declined to 47.7 in January from
49.5 a month ago. The flash reading was 47.0. The decline in output
was broad based and led by services firms.
The services PMI came in at 47.3, down from 49.1 in December.
But score was above the flash 46.5.
Signaling a softer reduction in private sector output, Italy's
composite PMI rose to 47.2 from 43.0 in December. The drop in
services activity was partially offset by a quicker expansion in
Italy's services PMI climbed to 44.7 in January from 39.7 in
December. The sector has contracted for the sixth straight
Spain's composite output index declined to a level of 43.2, from
48.7 in December and extending the current period of decline to six
months. The manufacturing PMI decreased sharply to 41.7 from 48.0 a