A eurozone business activity expanded more slowly than expected this month, with weaker growthin service sector offsetting a milder industry contraction, according to one survey, while price pressures increased.
The common currency bloc started the year with a weaker tonebut sentiment has improved since Wednesday (21), after United States President Donald Trump backed down on tadditional fees which he had threatened to impose on eight European countries as leverage to take the Greenland.
O PMI (Purchasing Managers Index) Preliminary HCOB Composite for the Eurozone, compiled by S&P Global, remained at 51.5 this monthbut fell short of the forecast of 51.8 in a Reuters poll.
It remained above the 50.0 level, which separates growth from contraction, for the 13th consecutive month.
“The recovery still looks quite weak…Overall economic growth remains unchanged. Looking ahead, low growth in new orders is certainly not a game changer. Instead, the start of the new year points to more of the same in the coming months,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
New orders increased at the weakest rate since September and new export business contracted at the fastest pace in four months, suggesting that the demand remained weak in general. Companies closed job openings for the first time since September.
O Services PMI slowed to a four-month record low 51.9, from 52.4 in Decemberbelow the forecast of 52.6 in the Reuters poll.
A industrial activity contracted again, but at a slower pace. THE PMI of the sector rose to 49.4 is mes, from 48.8 in December, above the forecast of 49.1.
Overall price pressures have intensified, with input costs rising at the fastest rate since February and output prices rising at the fastest pace in nearly two years.
“It is likely that ECB members will feel validated in keeping interest rates at their current levels. Some of the more hawkish members may even argue that the next move should be up rather than down,” de la Rubia added.
Still, optimism about future activity rose to the highest level since May 2024.
