Eurozone Private Sector Remains Mired In Recession

(RTTNews) - The euro area private sector contracted for the seventh straight month in December with the largest economies becoming the biggest drags, final survey results from the purchasing managers' survey by S&P Global showed on Thursday.

The final HCOB composite output index held steady at 47.6 in December. The flash reading was 47.0. A PMI score below 50.0 indicates contraction.

The survey showed that demand for goods and services continued to weaken at the end of the year. A considerable drag on sales came from the foreign markets.

Employment logged a second straight month-on-month decline. That said, businesses' growth expectations improved to reach their strongest for seven months.

Turning to prices, the survey data signaled a cooling of input cost pressures. However, output charge inflation accelerated to a six-month high.

The HCOB services PMI rose fractionally to 48.8 in December from 48.7 in November. The reading was well above the flash estimate of 48.1. "The Composite PMI, a reliable indicator of overall economic performance, is sounding the recession alarm for the Eurozone, though," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"Adding weight to this observation is our GDP Nowcast model, which forecasts a back-to-back contraction in the region's output for the fourth quarter," the economist added.

Of the nations where composite PMI data are available, France, Germany and Italy came at the bottom three rankings.

On the other hand, Spain recovered from the contraction. Although the expansion was marginal, it was the fastest since last July.

Spain's composite PMI climbed to 50.4 from 49.8 a month ago. At the same time, the services measure registered 51.5, up from 51.0 in November, and was also above economists' forecast of 51.2.

Germany's private sector contracted for the sixth straight month in December. The composite PMI posted 47.4 compared to 47.8 a month ago. The flash score was 46.7.

At 49.3, the services PMI hit a two-month low, down from 49.6 in November. However, the reading was above the initial estimate of 48.4.

There was a sharp and sustained reduction in France's private sector output. The composite output index climbed to 44.8 from 44.6. The initial score for December was 43.7.

The services activity index posted 45.7 in December. However, this was above November's 45.4 and the initial score of 44.3.

Although Italy's private sector remained in contraction territory for the seventh successive month, the latest drop was the softest in three months.

The composite output index picked up to 48.6 from 48.1 in the prior month.