Euro zone composite PMI holds near 4-year high in December

Eurozone private sector activity expanded strongly in December underpinned by broad based growth in manufacturing and services, flash data from Markit showed Wednesday. The sector contracted in five out of the first ten months of the year, indicated by a reading below 50.

The overall flash PMI missed forecasts of 54.2, coming in at 54.

Commenting on the report, Chris Williamson, Chief Economist at Markit said, “Although the PMI edged lower in December, the fourth quarter as a whole saw the largest increase in business activity for four-and-a-half years”.

For the euro area, Markit’s Purchasing Managers’ Index (PMI) data for the month of December stood at 54 – close to November’s 54.2 – an uptick in orders pushed the employment growth rate to its highest level since May 2011, indicating that companies are optimistic about the region’s economic growth.

European service sector PMI also missed estimates of 54.1, coming in at 53.9. The expected score was 54. He expects growth in the final three months of the year of 0.5 per cent after the 0.3 per cent achieved in the third quarter, pushing this year’s overall GDP up by 1.5 per cent.

However, Mr Williamson said policymakers were “likely to remain disappointed by the relatively modest pace of expansion and lack of inflationary pressures”.

That was thanks to a surprise surge in the French manufacturing sector in December.

The composite PMI index, which combines services and manufacturing, dipped to 50.3 from 51.0 a month earlier, even though the manufacturing figure reached a 21-month high. Economists predicted the gauge would remain unchanged at 51. Output growth slowed fractionally at both manufacturers and service providers.