Ômicron drops economic activity in Europe, research indicates

Restrictions imposed by the arrival of omicron, a new variant of the coronavirus, in Europe brought down private sector economic activity on the continent in December.

The IHS Markit’s composite purchasing managers index (PMI) for the Eurozone and the UK shows a decline in the services sector and in optimism.

In the UK, the private sector had the worst growth in ten months after the variant affected the activity of accommodation and travel companies. The country’s PMI dropped to 53.2 points in the preliminary reading for December, from 57.6 in November.

Although it was still above the 50-point dividing line – which separates growth from contraction –, a Reuters survey of economists had pointed to a much stronger reading, at 56.4.

Considering only the services sector, the index dropped drastically from 58.5 to 53.2 points, reaching its lowest level since February and below all forecasts by the Reuters survey, which pointed to a reading of 57 points.

Eurozone countries also had services affected. The PMI for services in the region also dropped below expectations, from 55.9 points in November to 53.3 in the December preview. Analysts had expected the index to come in at 54.1 points, according to Reuters.

Overall business activity for the bloc dropped from 55.4 points to 53.4, against 54 points in analysts’ forecast.

“The eurozone economy is taking yet another blow from Covid-19, with rising infection levels hampering growth in the services sector in particular, resulting in a disappointing end to 2021,” said Chris Williamson, economist. head of business at IHS Markit.

Factories, generally less affected by coronavirus restrictions, have also suffered to some extent. The manufacturing PMI dropped from 58.4 points in November to 58 points in December, the lowest mark in ten months.

The manufacturing indicator for the United Kingdom, on the other hand, to 53.3 points, the best mark in four months (it was 52.7 in November), thanks to a slowdown in supply chain problems that persisted for more than a year.

The survey’s optimism indicator for the country, on the other hand, reached the lowest level in 14 months.

Eurozone surplus falls further than expected in October

The eurozone’s trade surplus with the rest of the world was much smaller than expected in October, as the bloc’s trade deficit in energy widened due to higher gas and oil prices.

The European Union (EU) statistics office, Eurostat, said on Thursday (16) that the unadjusted trade surplus of the 19 countries that use the euro was only 3.6 billion euros (BRL 23.1 billion) in October, against 29.8 billion euros (BRL 191.5 billion) a year earlier and half the 7.6 billion euros (BRL 48.8 billion) expected by economists.

While non-seasonally adjusted exports rose 7.3% year-on-year in October, the value of imports soared by 24.1%, Eurostat said.

Adjusted for seasonal fluctuations, the trade surplus was 2.4 billion euros (R$15.4 billion), with exports up 2.4% month-on-month and imports up 4.3%.