Euro area growth slowed in January to least in almost a year, Markit says

The slowdown in China may be having an impact on the Eurozone economy at the start of the year, some market observers said following the release of weaker-than-expected manufacturing and service sector purchasing managers’ surveys.

Markit’s preliminary composite purchasing managers’ index for the euro area slipped from a reading of 54.3 in December to 53.5 for January, coming in below economists’ forecasts for a print of 54.1.

The manufacturing sector PMI fell from a reading of 53.2 to 52.3 (consensus: 53.0), its lowest in three months.

According to the survey compiler, the service sector fared little better, with the PMI for that sector retreating from 54.3 to 53.6 (consensus: 54.2) – a 12-month low.

Employment held up well, according to Markit, despite growth in the euro area having “slackened” to its weakest in almost a year. Improved business confidence and higher backlogs of uncompleted work meant staffing levels were steady at the four-and-a-half-year highs seen in December.

Commenting on the ‘flash’ PMIs, Chris Williamson, chief economist at Markit said: “The cooling in the pace of growth in euro area business activity at the start of 2016 is a disappointment but not surprising given the uncertainty caused by the financial market volatility seen so far this year.”

However, “it would be wrong to get too worried.”

The 15% drop in oil prices over the last month would boost households’ spending on other goods and services.