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Eurozone Private Sector Growth Slows As Omicron Variant Hits Services

eurozone m pmi 032417 24jan22 lt

Eurozone private sector growth eased in January as the Omicron variant hit the services activity, while manufacturers benefited from easing supply constraints, flash survey results from IHS Markit showed on Monday.

The flash composite output index slid to an 11-month low of 52.4 in January, from 53.3 in December. The score was forecast to fall to 52.6. Nonetheless, a reading above 50.0 indicates expansion in the sector.

The slowdown masked wide variations in the performance by sector. The service sector grew at the slowest pace since last April, while the manufacturing growth accelerated to the fastest since last August.

The services Purchasing Managers' Index came in at 51.2, down from 53.1 in the prior month and economists' forecast of 52.2.

Meanwhile, the manufacturing PMI rose unexpectedly to 59.0 from 58.0 a month ago. The score was seen at 57.5. An alleviation of supply chain delays provided a welcome boost to manufacturing production.

By country, Germany's private sector rebounded after a slide into mild contraction in December, registering the strongest expansion since September thanks to a surge in factory production and a return to growth for the service sector.

The flash composite output index rose unexpectedly to 54.3 in January from 49.9 in December. The score was forecast to fall to 49.2.

The manufacturing PMI improved to 60.5 in January from 57.4 in the previous month. The expected level was 57.0.

At 52.2, the services PMI was up from 48.7 in December. Nonetheless, this was the second-lowest level in the past nine months and above economists' forecast of 48.0.

On the other hand, growth in France hit the lowest since April, reflecting a near-stalled factory sector and a sharply weaker service sector performance.

The flash composite output index fell more-than-expected to 52.7 in January from 55.8 in December. The expected reading was 54.5.

The drag on economic performance stemmed from the service sector as the production of goods rose at a slightly faster pace.

The services PMI came in at 53.1 in January, down from 57.0 in December and the economists' forecast of 55.3.

The manufacturing PMI dropped only slightly to 55.5, as expected, from 55.6 in the previous month.

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