A resurgence in COVID 19 infections curtailed growth in the bloc's dominant service industry, a survey showed, and could weaken further if tighter restrictions are imposed in December, as a result of the euro zone's economic recovery.
As the Omicron coronaviruses spread rapidly at the end of last year, governments imposed measures to contain infection rates, particularly in Germany -- Europe's largest economy.
That left IHS Markit's Composite Purchasing Managers' Index PMI a good gauge of overall economic health, falling to 53.3 in December from 55.4 in November, its lowest since March.
While the final reading was below an earlier 53.4 flash estimate, it did hold above the 50 mark separating growth from contraction.
The accelerated expansion in output we saw in November turned out to be brief. Joe Hayes, senior economist at IHS Markit said that the spread of the Omicron variant had a major impact on the services sector, and has resulted in renewed hesitancy among customers.
A PMI covering the services industry dropped to an eight month low of 53.1 from November's 55.9, under the 53.3 preliminary reading.
Services firms increased headcount at the slowest pace since May due to weaker demand and the threat of further restrictions on the horizon. The employment index fell to 53.6 from 55.4.
A factory PMI released on Monday, showing manufacturing activity remained resilient in December, suggested that supply chain bottlenecks had been easing, which has helped alleviated some price pressures.
The composite input prices index stayed high at 74.1, albeit below November's 76.0. The output prices index fell but was elevated.
There was little to cheer about inflation. Although there was a marginal easing of price pressures, we're still in excessively hot territory, increases in input and output costs were the second-quickest on record, according to Hayes, IHS Markit's chief economist.
Com markets rates-bonds ecb-set dial-back stimulus-one more-notch -- 2021 -- 12 -- 15 raised its inflation projections last month and now sees inflation at 3.2% this year, well above its 2.0% target.