Eurozone's Decline in Business Activity Eases in December

Forex - The decline in commercial activities in the Eurozone has eased slightly this month due to the service sector's return to growth and its compensation for the prolonged contraction in the manufacturing industry. The HCOB Eurozone Composite Purchasing Managers' Index, compiled by S&P Global, rose to 49.5 in December from 48.3 in November, but still remained below the 50 mark that separates growth from contraction. Economists had predicted that the Index would drop to 48.2.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stated, “The year-end was generally a bit more conciliatory than expected. Service sector activity has returned to the growth territory and is showing a notable expansion rate, albeit not enthusiastic, similar to that seen in September and October.” An index measuring services rose from 49.5 to 51.4, defying expectations that there would be no change from November.

However, the service employment index, which indicates that companies do not expect a recent improvement in activities, fell from 51.0 to 50.1, keeping staffing levels generally stable. The manufacturing PMI index has remained below 50 since mid-2022, holding steady at 45.2 in December, just below the 45.3 forecast from the survey. The index that feeds into the Composite PMI and measures production decreased from 45.1 to 44.5.

De la Rubia commented, “The situation in the manufacturing sector is still quite dire. Production declined more rapidly in December compared to other periods of this year, and incoming orders also decreased.”