LONDON (Reuters) – The euro zone economy ended 2024 in a fragile state, according to a survey published on Monday, reflecting a second consecutive monthly contraction in overall activity in December as the modest recovery in services n failed to compensate for the deeper slowdown in the manufacturing industry.
The final Eurozone Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 49.6 in December from 48.3 in November. Due to the holiday season, data was collected earlier than usual, with the survey conducted from December 5 to 18.
This figure is slightly higher than the preliminary estimate of 49.5, but still below the 50 mark which separates growth from contraction.
The main index was boosted by the services sector, whose PMI index rebounded above the equilibrium threshold to 51.6 from 49.5 in November, but it was weakened by a sharper decline in industrial activity.
“The December PMI data doesn’t exactly provide a fantastic basis for a services sector boom in 2025, but at least inbound business has stopped falling and the decline in order books has eased,” said Cyrus of la Rubia, chief economist at the Hamburg Commercial Bank.
“Service providers can count themselves lucky because, unlike manufacturers, they are not directly affected by the threat of US tariffs. Overall, they should help ensure that the industry’s weakness does not not cause the entire economy to fall in 2025.”
An index measuring new service activities, an indicator of demand, returned to growth after three months of decline. It was 50.2 in December, compared to 48.1 in November.
And this, despite an increase in overall prices charged, as companies tried to compensate for a greater increase in input costs. The composite producer price index rose from 51.9 to 52.5, its highest level in four months.
“At the (December) press conference of the European Central Bank (ECB), President Christine Lagarde reiterated that services inflation was still too high. The December PMI survey for the services sector confirms this “, said Cyrus de la Rubia.
“For monetary policy, this means that the central bank should remain cautious and make only modest interest rate reductions in the first quarter of 2025.”
(Written by Jonathan Cable; Bertrand De Meyer, edited by Blandine Hénault)
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