Eurozone December PMI higher than expected – January 4, 2024

Written by Hans Bentzen

FRANKFURT (Dow Jones) – Activity in the euro zone's private sector contracted less in December than previously expected, with the business outlook improving again. In its second publication, the composite index of manufacturing and non-manufacturing output compiled by S&P Global remained stagnant at the previous month's level of 47.6 points. On the other hand, economists expected the first publication to be confirmed by 47.0 points.

However, according to this measure, the eurozone economy remains in recession because only index levels of 50 points or more indicate that the economy is growing. The non-manufacturing Purchasing Managers' Index (PMI) rose to 48.8 (48.7) points, after the first publication reported a decline to 48.1 points.

Industrial production and business activity in the services sector contracted equally and at roughly the same rate as the previous month. In terms of country-by-country developments, the largest economies were the slowest in the Eurozone. Among the countries for which composite PMI data are available, France, Germany and Italy are at the bottom of the PMI rankings, in that order.

The collective German PMI fell to 47.4 (47.8) points, the French index rose to 44.8 (44.6) and the Italian one to 48.6 (48.1).

As in almost every month since mid-2022, the backlog of orders in the euro area also fell in December due to a continuing decline in orders. Despite weakening to a five-month low, the decline in unfilled orders remained strong, which is why the employment rate fell slightly again. However, the corresponding jobs index fell to its second lowest value in three years.

Regardless, year-on-year business expectations continued to improve in December, reaching their highest level in seven months. Despite the significant improvement compared to the low of last September, the level of optimism remained weak, which is why the corresponding expectations index was once again below its long-term average value.

Cost inflation slowed again and was weaker than in the previous three months. However, sales prices rose at the highest rate in six months.

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DJG/HAP/SH

(End) Dow Jones News Agency

January 4, 2024, 04:38 ET (09:38 GMT)