Eurozone PMI data for December pointed to a clear loss of momentum heading into year-end. PMI Manufacturing slipped from 49.6 to 49.2, an eight-month low. PMI Services also eased from 53.6 to 52.6, dragging PMI Composite down from 53.8 to 51.9 and signaling a broader slowdown in activity.
According to Hamburg Commercial Bank, the weakness was driven mainly by Germany, where the industrial downturn intensified. France showed tentative signs of industrial stabilization, but that improvement was offset by stagnation in services. Germany’s service sector, by contrast, continued to expand solid. Overall, the data suggests that “the runway into the new year seems pretty unstable”.
Cost inflation in the service sector accelerated to its highest level in nine months, reinforcing the ECB’s concern over wage-driven price pressures. With the central bank meeting on December 18 and closely monitoring services inflation, the PMI data is likely to validate its stated preference to leave interest rates unchanged, despite softer growth signals.
