Eurozone private sector downturn eases as services growth revised higher
December's downturn in private-sector activity in the eurozone wasn't as bad as initially feared, according to revised estimates from the Hamburg Commercial Bank (HCOB) on Monday, as the service sector grew more than expected.
The HCOB composite purchasing managers' index for single-currency region was lifted by 0.1 points to 49.6, up from the flash reading of of 49.5 released two weeks ago and higher than the 48.3 reported for November.
The index is now just inches away from the breakeven 50.0-point level which separates contraction from growth.
While the manufacturing sector remains firmly in the doldrums – the manufacturing PMI for December fell to 45.1 from 45.2 – the services PMI was revised up to 51.6 from a preliminary print of 51.4, rebounding strongly after its first contraction in ten months in November (49.5).
Services PMIs from Germany, France, Italy and Spain were all revised higher on Monday, according to HCOB, with France remaining the only country with a contracting services sector (albeit only marginally at 49.3). Notably, growth in the Spanish services industry reached a 20-month high of 57.3.
However, despite the upward revisions, HCOB reported that there was an "intensification" of inflationary pressures across the eurozone in December while growth expectations for the coming year remain weak.
"Looking back, 2024 wasn't such a bad year for the service sector. The first half started moderately, growth then weakened, but it seemed to bounce back a bit towards the end," said Cyrus de la Rubia, chief economist at HCOB.
"The steady decline in the order backlog is worrying, but it hasn't completely plummeted. Service providers have maintained their confidence, with future business prospects largely positive and even improving in December, despite the index measuring sentiment being below the long-term average."