January 6, 2020 / 9:05 AM / 23 days ago

Euro zone December business activity close to stagnation despite services bounce

LONDON (Reuters) - Euro zone business activity remained close to stagnation at the end of last year, a survey showed on Monday, as an upturn in services activity only partially offset a continued decline in the bloc’s manufacturing industry.

FILE PHOTO: A waitress serves wine to customers at the terrace of the "Casino de Ronda" restaurant in downtown Ronda restaurant in downtown Ronda, near Malaga, southern Spain July 24, 2014. REUTERS/Jon Nazca/File Photo

IHS Markit’s final euro zone composite Purchasing Managers’ Index (PMI), seen as a good indicator of economic health, nudged up to 50.9 in December from November’s 50.6.

That beat a preliminary estimate which suggested no change from the previous month but remained close to the 50 mark separating growth from contraction.

“Another month of subdued business activity in December rounded off the euro zone’s worst quarter since 2013. The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019,” said Chris Williamson, chief business economist at IHS Markit.

That is worse than the 0.2% growth predicted in a December Reuters poll.

A PMI for the bloc’s dominant services industry bounced to 52.8 from November’s 51.9, above a preliminary reading of 52.4. But a manufacturing PMI out last week showed factory activity contracted for an 11th straight month in December.

The upturn in services meant firms were at their most optimistic about the year ahead since May. A composite future output PMI jumped to 59.4 from 57.9.

Indicating services activity may remain resilient, firms in the sector were unable to match demand last month for the first time since July. The backlogs of work index climbed to 51.0 from 49.7.

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

To subscribe to the full data, click on the link below: here

For further information, please phone IHS Markit on +800 6275 4800 or email mailto:economics@ihsmarkit.com

Reporting by Jonathan Cable; Editing by Hugh Lawson

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