LONDON (Reuters) – The slowdown in euro zone activity deepened in December, according to a preliminary survey which suggests the bloc’s economy is almost certainly in recession.

The euro zone economy contracted 0.1% in the third quarter, according to official data, and the preliminary PMI for December, considered a good indicator of economic health, suggests that activity is is folded over each of the months of the fourth quarter.

The preliminary composite PMI index compiled by S&P Global fell to 47.0 this month, from 47.6 in November and a consensus of 48.0. This is the seventh consecutive month during which the index is below the level of 50 which separates growth and contraction in activity.

“The figures paint a discouraging picture of the eurozone economy, which shows no signs of recovery,” notes Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank.

“The probability that the euro zone has been in recession since the third quarter remains particularly high.”

Companies reduced their workforce for the second consecutive month, suggesting that they do not anticipate an immediate improvement in economic conditions.

The composite employment index stood at 49.6, its lowest level in three years, down slightly from November, which reached 49.7.

The services PMI index fell from 48.7 to 48.1, against a consensus of 49.0.

Demand for services fell again under the pressure of high policy rates. The new orders index fell from 46.7 to 46.6.

The manufacturing sector also had a disappointing December. The manufacturing PMI remained stable at 44.2, as in November, against a consensus of 44.6. The index is below 50 for its 18th consecutive month.

The index measuring production rose from 44.6 to 44.1.

Factory managers, however, were more optimistic for 2024, with the index of future production reaching its highest level since May and rising from 53.3 to 55.6.

(Written by Johnatan Cable, Corentin Chappron, edited by Jean-Stéphane Brosse)

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