Eurozone economy ends 2024 in fragile state – PMI
The eurozone economy wrapped up 2024 on a fragile note, contracting for the second consecutive month, according to the latest HCOB Eurozone Composite PMI survey on Monday. The Composite PMI Output Index rose to 49.6 in December, up from November’s 48.3, but remained below the neutral 50.0 threshold, signaling continued economic contraction.
Key findings reveal that the downturn was driven entirely by a sharp decline in manufacturing output, while the services sector showed modest growth. Demand for euro area goods and services continued to decline, marking seven months of falling new orders, with export demand contracting for nearly three years.
Sectoral and Regional Highlights
Manufacturing Weakness: Factory production saw a steep decline, dragging overall economic activity into contraction territory.
Services Resilience: The services sector bounced back modestly, with the Services PMI Business Activity Index climbing to 51.6 from 49.5 in November.
Regional Variations: Germany, France, and Italy recorded reductions in business activity, with France performing the weakest. However, Spain and Ireland bucked the trend, posting notable expansions. Spain saw its fastest growth since March 2023.
Price pressures intensified in December, with input costs and output charges accelerating, particularly in the services sector. Employment across the eurozone fell at its sharpest rate in four years, driven by job cuts in manufacturing, as services hiring failed to offset factory retrenchments.
Despite subdued growth expectations, business sentiment improved to a three-month high. However, confidence remained below historical averages.
“December’s PMI survey for the services sector confirm this, showing costs rising even more sharply than the previous month, likely due to higher wages. Some of these higher costs have been passed on to customers, leading to a bigger increase in selling prices.” Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said.
Attribution: Amwal Al Ghad English
