Eurozone businesses expanded at their weakest rate since mid-2013 at the start of the year as demand fell for the first time in four years, with a manufacturing slowdown spreading to services, a survey showed yesterday.
Forward-looking indicators in the downbeat survey also suggested there will not be any turnaround soon. That will make disappointing reading for policymakers at the European Central Bank, who recently ended their more than 2.6 trillion euro asset purchase stimulus program.
IHS Markit's Eurozone Composite Final Purchasing Managers' Index (PMI), considered a good measure of overall economic health, dipped to 51.0 from December's 51.1, its lowest reading since July 2013.
While that was higher than an earlier flash reading of 50.7, it was barely above the 50 mark that separates growth from contraction.
"It does suggest the eurozone economy has been weakening for a while now and the anticipated rebound in activity is not really happening," said Peter Dixon at Commerzbank. "On the whole, we are operating in very low gear and it suggests the ECB is not going to be in any position to tighten policy for some time to come."
Retail sales in the eurozone fell as expected in December, dragged down by the steepest decline in shopping in Germany in 11 years, official data showed yesterday. That reinforced the sense of an economy slowing at the close of the year.
Individual PMI surveys showed while German activity accelerated, it looked tenuous. France's composite reading sank to 48.2, its lowest in over four years. Across the channel, another PMI showed Britain's giant services industry is suffering and risks stalling or contracting as Brexit nears and the global economy slows. Services firms reported job cuts for the first time in six years amid falling orders, according to the survey which suggested Britain's economy is flat-lining after losing momentum late last year.