By Paul Hannon 
 

French economic growth likely ground to a halt in December as businesses reported widespread disruption as a result of weeks of anti-government protests, while a slew of eurozone, German and French PMI data releases sounded downbeat signals.

The slowdown in the eurozone's second-largest economy comes as Italy hovers on the brink of a recession, and Germany seeks to rebound from a third-quarter drop in output. It also coincides with a European Central Bank decision to end a bond-buying program that has provided support to growth for years.

Data researcher IHS Markit on Friday said its provisional measure of activity in the French private sector--based on a survey of 750 businesses operating in the manufacturing and services sectors--fell to 49.3 in December from 54.2 in November. This is the first time since June 2016 that the reading has fallen below 50.0--the threshold that points to a drop in activity.

French Finance Minister Bruno Le Maire had earlier in the week highlighted the negative impact of the so-called yellow vests protests on the economy, estimating that they will trim 0.1 percentage points from the country's economic growth this year. The Bank of France also cut its growth projection for the year's final quarter by 0.2 points on Monday, citing the impact of protests on retailers.

Activity in both the manufacturing and services sectors declined in December, with the former recording its weakest month for almost four years.

The weakness in France may prove temporary if the protests ease. And for the eurozone economy as a whole, the greater worry may be Germany, where the composite Purchasing Managers' Index fell to 52.2 from 52.3 in November, reaching its lowest level in four years.

Economists had expected to see a rebound in German growth during the final three months of the year as the automobile industry recovered from a third-quarter slump that was caused by delays in testing model types for compliance with new emissions standards. Economists surveyed by The Wall Street Journal last week had expected to see a rise in the PMI for the manufacturing sector stabilize, but instead it fell to 51.5 from 51.8.

The eurozone economy experienced its weakest quarter of growth since early 2013 during the three months through September, with Germany and Italy contracting as France picked up.

But the surveys of purchasing managers suggest any end-of-year rebound will likely be modest, leaving the economy entering 2019 on an uncertain trajectory. The composite PMI for the eurozone as a whole fell to 51.3 from 52.7 in November--its lowest reading for 49 months.

"Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area," said Chris Williamson, IHS Markit's chief business economist. "The surveys also point to further signs that the struggling autos sector continued to act as a drag on the region's economy."

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

December 14, 2018 04:58 ET (09:58 GMT)