Business activity in Europe’s 20-nation single currency bloc continued to contract at the end of 2023, as a downturn in the dominant services industry stretched into the final month of the year, data compiled by S&P Global has revealed.
Flash Composite Purchasing Managers’ Index (PMI) for the bloc, a measure of manufacturing and services activity, was revised up for December to match November’s 47.6 after a preliminary estimate of 47.0. However, the gauge remained below the 50 mark, which separates growth from contraction, for a seventh consecutive month.
The data shows that the Eurozone that saw a contraction of 0.1% in the third quarter of 2023, and likely shrank again last quarter, having met the technical definition of a recession.
Meanwhile, the Services Business Activity Index moved up to a five-month high of 48.8 compared to 48.7 recorded in November, as demand was seen to further weaken in the euro area.
“Activity levels were constrained at the end of the year by a further weakening of demand conditions. The latest survey data signaled a further solid drop in new business receipts by both eurozone manufacturers and service providers,” the report reads.
Although the decline in demand for services slightly eased in December with the new business index rising to a five-month high of 47.1 from 46.7, it remained below 50 for a sixth month.
“It’s not quite recession territory yet for services, but the vibe is far from growth-oriented. There are a lack of clear signals indicating an imminent return to robust expansion,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The Composite PMI… is sounding the recession alarm for the euro zone though,” he added saying his economic modelling forecast a contraction in the fourth quarter.
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