Subdued eurozone factory activity in December, UK manufacturing slips

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Subdued eurozone factory activity in December, UK manufacturing slips

Subdued eurozone factory activity in December, UK manufacturing slips
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There was not much holiday cheer for eurozone manufacturers.

The year ended on a subdued note, with output, new orders and employment all expanding only sluggishly in December.

In addition companies said they had cut wholesale prices for the fourth month running.

In Germany, Europe’s largest economy, manufacturing did return to growth, but remained weak.

New orders picked up, albeit modestly, after three months of declines, with German firms reporting growth in export business and orders from the home market.

The downturn also deepened in France, the bloc’s second-biggest economy.

“Eurozone factory activity more or less stagnated again in December, rounding off a year which saw an initial, promising-looking upturn fade away and stall in the second half of the year,” said Chris Williamson, chief economist at Markit, the company that compiled the statistics from surveys sent to thousands of manufacturers.

Williamson said the weakness, coupled with muted service sector growth, pointed to fourth-quarter economic growth of just 0.1 percent.

It all adds pressure on the European Central Bank to boost the economy and avoid deflation.

UK manufacturing slips

British manufacturing also expanded at a much weaker pace than expected in December.

Business surveys showed growth in new factory orders also dropped to a three-month low and export orders stagnated.

However, there were signs that business lending was picking up though not by as much as lending to individuals which hit a nine year high.

Sterling hit a 16-month low after the Markit/CIPS UK Manufacturing Purchasing Managers’ Index, a closely-watched monthly business survey, hit a three-month low in December, missing all forecasts in a Reuters poll.

Separate data from the Bank of England showed lending to consumers surged at its fastest rate in nearly a decade in the three months to November.

Taken together, the figures suggested Britain’s upturn — one of the strongest among advanced economies in 2014 — will remain dependent on consumption rather than other sources of growth such as investment and exports.