Eurozone business activity growth slows in December

(Sharecast News) - Growth in eurozone business activity eased more than expected in December, to a three-month low, according to a survey released on Tuesday. The HCOB flash eurozone composited PMI, which is compiled by S&P Global, fell to 51.9 from 52.8 in November. It remained above the 50.0 mark that separates contraction from expansion but was below economists' expectations for a reading of 52.7.

The flash manufacturing purchasing managers' index declined to 49.2 in December from 49.6 the month before, while the services PMI business activity index fell to 52.6 from 53.6.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "Economic growth slowed at the end of the year due to a slight contraction in the manufacturing sector and weaker momentum in the service sector. The weaker performance is primarily attributable to German industry, where the downturn intensified. In France, on the other hand, there are signs of a cautious recovery in industry, although a single monthly figure should not be overrated.

"However, the service sector, which had expanded last month, is stagnating there, while Germany's service companies saw another solid rise in activity. All in all, the runway into the new year seems pretty unstable.

"Despite a softening of growth, the service sector continues to look relatively robust. Companies have no reason to complain about new business and are therefore hiring additional staff. Looking ahead, however, companies have become somewhat more cautious, which is likely due in part to the decline in order backlogs. We expect the service sector to continue to play a stabilising role for the economy as a whole in the coming year. However, a real upturn will only succeed if the manufacturing sector regains its footing."