Eurozone private sector contracts again in final month of 2020

According to the report from IHS Markit, the eurozone private sector economy contracted for a second successive month in December, albeit at a much slower rate. 

After accounting for seasonal factors, the Eurozone PMI Composite Output Index rose from 45.3 in November to 49.1 in December. The final result was lower than the earlier flash reading (49.8).

Services remained the principal drag on economic output, with activity here falling for a fourth successive survey period. In line with the recent trend, manufacturing remained the principal bright spot of eurozone economic performance, expanding for a sixth successive month and at a faster rate than in November.

The latest fall in regional economic output was linked to a similar sized drop in incoming new business, which declined for a third month running. Social distancing measures and restrictions were reported to have weighed on demand, especially in nations such as Italy and Spain. On a more positive note, growth of new export business was recorded for the third time in the past four months.

As the downturn in overall levels of incoming new business continued, companies were able to comfortably keep on top of workloads as evidenced by a drop in levels of work outstanding for the twenty second successive month. With overall workloads down, job losses continued in line with the trend since March. The rate of contraction was, however, marginal. 

Amid recent news of vaccine developments, private sector companies were noticeably more optimistic about activity in 12 months’ time. Overall, optimism was at its highest level since April 2018.