Downturn in EU’s business activity eases in January – PMI

Eurozone services PMI fell to a three-month low of 48.4 in January from December’s 48.8, dipping well below forecasts for an uptick to 49.0.

Manufacturing PMI bounced to 46.6 this month from 44.4 in December, well above 44.8 consensus.
Positive impact from shallower than expected decline in manufacturing sector was offset by stronger than expected drop in the activity in EU’s dominant services sector, pointing to a slowdown in bloc’s business activity.

Eurozone preliminary Composite PMI, which tracks the performance in both, services and manufacturing sectors, rose to 47.9 in January from December’s 47.6, just tick below 48.0 forecast, but remaining below the 50 level which divides growth from contraction, for the eighth consecutive month.

The beginning of the year brings positive signals for the euro zone as manufacturing sector experiences a widespread easing of the downward trajectory seen in the past year and moderate contraction in services sector, though evidence of slight rise of inflation, souring the sentiment and disappointing ECB policymakers who are keen to get inflation back to their 2% target.