Eurozone business growth slows more than expected

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Eurozone business growth slows more than expected

LONDON Reuters - business growth has slowed more than expected this month as renewed restrictions are imposed to curb the Omicron coronaviruses variant that curtails the recovery in the bloc's dominant services industry, a survey showed on Thursday.

Europe is facing a fourth wave of infections and many governments are encouraging citizens to stay at home and avoid unnecessary social contact.

IHS Markit's Flash Composite Purchasing Managers' Index, a good indicator of overall economic health, dropped to 53.4 in December from 55.4 in November, its lowest since March and below the 54.0 predicted in a Reuters poll.

That headline number was dragged down by PMI, which sank to an eight month low of 53.3 from 55.9. While above the 50 mark separating growth from contraction, it missed the Reuters poll estimate for 54.1.

The euro zone economy is being dealt yet another blow from COVID 19 with rising infection levels dampening growth in the service sector, which could result in a disappointing end to 2021, said Chris Williamson, chief business economist at IHS Markit.

Growth in demand for services dropped to its lowest since April - when it contracted - with the new business index falling to 52.6 from 54.2.

Factories, generally less affected by coronavirus restrictions, also suffered slightly and the manufacturing PMI fell to a 10 month low of 58.0 from November's 58.4. An index that feeds into the composite PMI nudged up to 53.9 from 53.8.

Price pressures abated despite the fact that the European Central Bank meets later on Thursday, which is a bright spot for policymakers at the European Central Bank. The output prices index slid to 87.0 from 88.9, and the input prices index fell even further.

Williamson said that the upward pressures on inflation have been relieved by the ease of supply constraints.

According to a Reuters poll, the amount of assets the ECB buys each month is going to be halved, according to the amount of assets it buys each month from April. As the vaccine roll-out continues apace, optimism about the year ahead has improved.