According to the flash report from HCOB, business activity in the private sector of the eurozone continued to contract in December, but at a slower pace than in November, when a 10-month low was reached. Output was scaled back amid sustained reductions in new orders, while the pace of job cuts was the fastest in four years.
The eurozone composite PMI output index rose in December to 49.5 points from 48.3 points in November. An index value below 50 points indicates a reduction in activity in the sector. Economists had expected a decline to 48.2 points. The services PMI rose to 51.4 (2-month high) from 49.5 in November, while the manufacturing PMI remained at 45.2 points. Economists had expected the services PMI to remain at 49.5 points and the manufacturing PMI to rise to 45.3 points.
HCOB said that new orders in the private sector fell again in December (the 7th month in a row), but the rate of contract was weaker than in November. Meanwhile, new export orders also declined, and even more quickly than total new business. New business from abroad was down markedly, but to the least extent since August as both monitored sectors saw rates of contraction ease from the previous month. The data also pointed to the 5th monthly decline in employment in the private sector. Although remaining modest, the pace of job cuts quickened to the most pronounced in four years. Companies also continued to deplete backdogs of work in December. The pace of depletion remained solid, despite easing to the weakest since July.
As for the inflationary situation, input prices increased at a marked pace in December, and one that was the fastest in four months. The pace of output price inflation also accelerated, quickening for the third month running to the fastest since August, but remaining well below the peak seen in 2022. Business confidence regained some ground in December but remained weaker than the series average.