Eurozone business activity remains close to stagnation in December

Business activity in the eurozone remained close to stagnation in December, according to a survey released on Monday.

The IHS Markit composite purchasing managers’ index - which measures activity in the services and manufacturing sectors - ticked up to a four-month high of 50.9 from 50.6 in November, coming in ahead of the flash estimate of 50.6.

Despite the improvement, the index was only a touch above the 50.0 mark that separates contraction from expansion and languished at a level among the lowest seen since the first half of 2013.

The PMI for the services sector rose to 52.8 in December from 51.9 in November and a flash estimate of 52.4.

Chris Williamson, chief business economist at IHS Markit, said: "Another month of subdued business activity in December rounded off the eurozone’s worst quarter since 2013. The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019.

"At face value, the weak performance is disappointing given additional stimulus from the ECB, with the drag from the ongoing plight of the manufacturing sector a major concern. However, policymakers will be encouraged by the resilient performance of the more domestically-focused service sector, where growth accelerated in December to its highest since August. Business optimism about the year ahead has also improved to its best since last May, suggesting the mood among business has steadily improved in recent months."

Capital Economics said: "The eurozone's composite PMI for December was revised up slightly, but taken together with the other available evidence, this still suggests that the economy grew by only 0.2% quarter-on-quarter in Q4. And Germany's and Italy's indices are consistent with economic contraction."