Eurozone business growth at lowest level since 2013

 

Eurozone business growth at lowest level since 2013
The IHS composite index in Germany rose by half a point, still one of the weakest readings in four years.

Brussels - Disappointing survey data indicate that GDP is rising at a quarterly rate of just 0.1%

By AFP

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Published: Thu 24 Jan 2019, 6:48 PM

Last updated: Thu 24 Jan 2019, 8:49 PM

Eurozone business growth is at its lowest level in five-and-a-half years, according the initial reading of a survey by data firm IHS Markit.
The group's composite eurozone PMI fell to 50.7 points in January - a 54-month low - from 51.1 points in December, according to figures published on Thursday. A reading above 50 points indicates an expansion, and the trend appears to be heading towards stagnation.
"The disappointing survey data indicate that GDP [gross domestic product] is rising at a quarterly rate of just 0.1 per cent," said Chris Williamson, an IHS Markit economist. "The eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years," he added.
Williamson cited "yellow vest" protests in France as a drag on the euro area, but noted: "German businesses are also reporting their toughest spell for four years."
The composite reading for France slumped to a four-year low in January, falling to 47.9 points from 48.7 the previous month, an IHS statement said.
The contraction was particularly severe in the service sector amid recurrent protests by the "yellow vest" or gilets jaunes movement against government reforms and the globalised French economy.
The protests saw dozens of stores looted in Paris and other cities during holiday shopping weekends, while cargo transportation was hampered by roadblocks.
But "despite the continuation of gilets jaunes protests, it is unclear whether the latest weak performance was caused by the resulting disruption, or whether the anticipated global economic slowdown for 2019 is already beginning to take hold," said IHS Markit economist Eliot Kerr.
The survey was the latest sign that economic clouds have gathered over France, where growth has slowed markedly in recent months and is expected to reach just 1.5 per cent for 2018 according to the central bank, after 2.2 per cent in 2017.
In Germany, the IHS composite index rose by half a point to 52.1, which was still one of the weakest readings in four years.
While the services component ticked higher, manufacturing edged into contraction territory with a reading of 49.9.
Two forward-looking components, new orders and job creation, both worsened as well, IHS pointed out.
Inflows of new business declined for the first time in more than four years and employment growth eased to ts slowest pace since December 2016.
A slowdown in demand from China, the world's No.2 economy, has been seen as major factor hurting Germany's export-oriented economy, while the car industry faced challenges that stemmed from new emissions tests.
Earlier this month the International Monetary Fund predicted 1.3 percent growth for Germany in 2019 - 0.6 points lower than its previous forecast.


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