Eurozone output rises, but growth still lacklustre

(Sharecast News) - Economic activity across the eurozone turned positive in January for the first time in five months, according to final estimates out on Wednesday from S&P Global and Hamburg Commercial Bank (HCOB). The eurozone composite purchasing managers' index rose to 50.2 last month after a reading of 49.6 in December, in line with the flash estimates released two weeks ago.

This was the first time above the neutral 50-point mark since August.

However, service-sector growth was revised slightly downwards, with the services PMI at 51.3, compared with the preliminary reading of 51.4 and down from 51.6 in December.

Despite the headline results showing growth across the region's private sector, a reduction in new business inflows suggests that the "rejuvenated upturn was fragile and primarily achieved through the completion of outstanding orders", the survey said.

Increases in cost pressures - with input price inflation at its highest since April 2023 - meant that firms were raising their prices more aggressively during the month, with above-average wage increases and higher carbon emissions taxes in Germany partly to blame.

"The slow pace of growth in the services sector, which was evident almost all of last year, continued at the start of 2025," said Cyrus de la Rubia, chief economist at HCOB.

"Putting it more positively, growth at service companies played a crucial role in keeping the eurozone economy in expansion over the past year. Sluggish, but slightly accelerating growth in new orders and employment gives hope that this sector will gain a bit more momentum in the first quarter of this year."

However, de la Rubia said that an intensification of cost pressures spells bad news from the European Central Bank given how stubborn inflation in the services sector has been.