Eurozone PMI Services was finalized at 52.5 in January, down from December’s 52.8. PMI Composite was finalized at 51.3, up from December’s 50.9. Among the member states while reported the data, Germany PMI composite hit 5-month high of 51.2. France PMI Composite dropped to 4-month low of 51.1. Italy PMI Composite hit 3-monthhigh of 50.4.
Chris Williamson, Chief Business Economist at IHS Markit said:
“A further rise in the headline PMI to the highest since last August adds to evidence that the tide may be turning for the eurozone economy. Although growth remains subdued, with the survey signalling a quarterly GDP growth rate of just under 0.2%, manufacturing is showing welcome signs of stabilising after the heavy downturn seen last year and services growth remains encouragingly resilient, thanks largely to the improving labour market.
“Business confidence about the outlook has also improved markedly since late last year, now running at a 16-month high.
“Fears of a manufacturing downturn spreading to services have therefore eased, in turn helping assuage the risk of recession. We expect to see growth gaining momentum steadily as 2020 proceeds, as low inflation, a healthy job market and easing financial conditions support consumer spending, while improving global trade helps manufacturers.
“However, the pace of output growth is still subdued, and firms remain concerned by existing headwinds as well as fresh risks. Although US-China trade war tensions have cooled, US trade rhetoric has now turned to Europe, with the auto sector looking especially vulnerable to tariff threats. Similarly, while the UK has formally left the EU, trade discussions will no doubt cause an air of uncertainty to hang over the continent. The Wuhan coronavirus meanwhile represents a new potential disruptor to business and trade. We consequently expect the eurozone to avoid recession in 2020 but to struggle to muster growth of 1.0%.”
