2024.01.0409:17:00UTC+00Eurozone Private Sector Continues To Contract

The euro area private sector contracted for the seventh straight month in December, final survey data from S&P Global showed on Thursday.

The final HCOB composite output index held steady at 47.6 in December. The flash reading was 47.0.

The survey showed that demand for goods and services continued to weaken while employment levels declined again. That said, businesses' growth expectations improved to reach their strongest for seven months.

Turning to prices, the survey data signaled a cooling of input cost pressures. However, output charge inflation accelerated to a six-month high.

The HCOB services PMI rose fractionally to 48.8 in December from 48.7 in November. The reading was well above the flash estimate of 48.1. "The Composite PMI, a reliable indicator of overall economic performance, is sounding the recession alarm for the Eurozone, though," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"Adding weight to this observation is our GDP Nowcast model, which forecasts a back-to-back contraction in the region's output for the fourth quarter," the economist added.

Among major economies, Spain service providers achieved growth for the fourth consecutive month. In contrast, Germany and Italy remained near a state of stagnation. Meanwhile, France's service sector was the worst performer.

Spain services PMI registered 51.5, up from 51.0 in November and also above economists' forecast of 51.2. The composite output index climbed to 50.4 from 49.8 a month ago.

At 49.3, Germany's final services PMI hit a two-month low, down from 49.6 in November. However, the reading was above the initial estimate of 48.4.

The composite PMI posted 47.4 compared to 47.8 a month ago. The flash score was 46.7. There was a sharp reduction in France's services activity with the index posting 45.7 in December. However, this was above November's 45.4 and the initial score of 44.3. The composite output index climbed to 44.8 from 44.6. The initial score for December was 43.7.

Italy's service sector shrank for the fifth straight month in December. But the services PMI improved to 49.8 from 49.5 in November. The composite output index picked up to 48.6 from 48.1 in the prior month.