Euro zone January business activity returns to growth – PMI

LONDON (Reuters) – Economic activity in the eurozone unexpectedly returned to modest growth in January. The eurozone recession may not be as severe as feared, adding to the signs that the currency union could escape recession, a study shows.

S&P Global’s Flash Composite Purchasing Managers Index (PMI) is considered a good measure of overall economic health, rising to 50.2 this month from 49.3 in December.

January marked the first time since June that the index exceeded 50, beating the median forecast of 49.8 in Reuters polls.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “This survey is definitely welcome good news and the recession is unlikely to be as deep as previously feared. , suggesting that a recession is likely to be avoided altogether.”

A mild winter so far, falling gas prices and recent positive economic data have led a Reuters poll released on Monday to revise upwards its quarterly growth forecasts, but a technical recession is unlikely. still predicted.

In a sign that they are becoming more optimistic, companies have added headcount at a faster rate this month. The employment index rose to a three-month high of 52.5 from his December high of 51.9.

The PMI, which covers the block’s dominant service index, also surprised upwards, hitting a six-month high of 50.7. In December, he was 49.8 and was expected to be 50.2 in a Reuters poll.

Demand fell only slightly despite consumers facing higher bills. The new business index rose from 48.4, just short of breaking even at 49.8.

“But the area is not out of the woods just yet, as demand continues to decline. It’s just that the rate of decline is slowing,” Williamson said.

Factory activity also showed improvement, but still declined. The manufacturing PMI rose to 48.8 this month from 47.8, beating a Reuters poll forecast of 48.5.

The indicator measurement output that feeds the composite PMI bounced back from 47.8 to a seven-month high of 49.0.

Similar to the services PMI, the input price index fell, but businesses raised fees at a faster pace. The output price index he rose from 61.2 to 61.4, well below the average of the past three years.

Still battling high inflation, the European Central Bank will hike rates by 50 basis points each at its next two meetings, according to a Reuters poll.

Eurozone central banks are raising interest rates at the fastest pace in history, but have so far failed to bring inflation closer to their 2% target.

Reported by Jonathan Cable.Editing by Susan Fenton

Our standards: Thomson Reuters Trust Principles.

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