A disappointing start to the year for eurozone businesses with the dominant service sector suffering just as much as manufacturing.
Point of view
"A disappointing eurozone PMI survey for January indicated one of the weakest expansions seen over the past year and raises the prospect of further stimulus"
The results of the latest surveys of companies show tepid growth. And that was despite firms cutting prices for the fourth month running.
Growth in Germany, Europe’s largest economy, slowed but remained relatively solid.
France, the eurozone’s second biggest economy, which has been struggling to produce much growth of late, saw services businesses perk up a tiny amount, as hotels and restaurants reported continued weakness in the wake of the November terror attacks in Paris.
Growth in Italy’s services sector slowed.
Markit, the company that carried out the surveys, said its latest Purchasing Managers Indexes (PMIs) suggested a quarterly 0.4 percent growth pace for the eurozone, a rate it has struggled to beat for a long time.
Markit’s final Composite Purchasing Managers’ Index, which is seen as a good guide to growth, is compiled from the services sector data just released and the earlier manufacturing PMIs.
“A disappointing eurozone PMI survey for January indicated one of the weakest expansions seen over the past year and raises the prospect of further stimulus,” said Chris Williamson, chief economists at Markit.
“Growth of activity, order books and employment all lost momentum, but perhaps most worrying of all from a policymaker’s perspective is the intensification of deflationary pressures.”
However firms said they were more optimistic about the year ahead due to the prospect of more stimulus from the European Central Bank, even though stimulus efforts did not seem to have much effect in 2015.
In one upbeat piece of data, retail sales across the 19 countries using the euro increased in December thanks as sales of food, drinks and tobacco rose over the Christmas period, according to official data released on Wednesday.
Britain’s huge services sector appeared to have performed better despite a tough January on financial markets, although firms were concerned about risks ahead, including a referendum on European Union membership.
The Markit/CIPS services PMI for Britain, which doesn’t use the euro, edged up.