Little new year cheer for euro economy

The eurozone economy ended 2014 with its worst quarter for over a year, according to surveys of activity that highlighted continuing downturns in France and Italy and a stuttering performance by paymaster Germany.
By The Newsroom
Published 6th Jan 2015, 16:01 BST

Italy’s service sector shrank for the first time in three months in December while overall business activity in France contracted, Markit’s Purchasing Managers’ Indexes (PMIs) showed.

With fears cheap oil will tip the now-19-country bloc into deflation prompting calls for urgent action by the European Central Bank, firms across the eurozone again cut prices, as they have been doing for nearly three years.

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“The downward revision to December’s eurozone PMI added to signs that the economy is barely expanding. And with the price indices highlighting the threat of deflation, the ECB remains under intense pressure to increase its support,” said Jennifer McKeown, senior European economist at Capital Economics.

After ECB President Mario Draghi said last week the central bank stood ready to respond to the risk of deflation, many expect an announcement to come as soon as this month. ECB policymakers meet on January 22.

Markit’s final December Eurozone Composite PMI, based on surveys of thousands of companies across the region and seen as a good indicator of growth, missed an earlier flash reading of 51.7, coming in at 51.4.

Related topics:FranceItalyGermany