Euro area manufacturing and service sector PMIs continue to slide in January

A key gauge of euro area manufacturing and services sector activity revealed that growth stopped almost completely at the start of 2019, with France's economy threatening to drop into contraction, alongside a downturn in German manufacturing.

IHS Markit's preliminary Eurozone Purchasing Managers' Index composite output gauge declined from a reading of 51.1 for December to 50.7 in January, hitting a 66-month low in the process.

Economists had in fact expected an improvement in the composite index to 51.4.

The so-called 'flash' euro area PMI services sector index fell from 51.2 to 50.8 and that for the factory sector from 51.4 to 50.5.

According to Chris Williamson, the chief business economist at the survey compiler, the euro area economy slipped nearer to "stall speed" in January, with firms reporting falling demand for the first time in four years.

In Williamson's opinion, the "disappointing" survey results pointed to a quarterly rate of GDP growth in the Eurozone of 0.1%.

"Ongoing auto sector weakness, Brexit worries, trade wars and the protests in France were again widely cited as factors dampening growth, but the survey responses indicate that a deeper malaise has set in at the start of the year," Williamson said.

"Companies are concerned about a wider economic slowdown gathering momentum, with rising political and economic uncertainty increasingly affecting risk appetite and demand."