Eurozone Sentiment Slightly Improved... Yet Persistent Stagnation Fear

Eurozone PMI at 50.9 in December... Slight Increase
Mostly Driven by Service PMI Rise, Manufacturing Sentiment Remains Weak

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] In December last year, the business sentiment of companies in the Eurozone (19 countries using the euro) showed a slight improvement, but it was still in a state of stagnation (long-term economic recession).

According to Bloomberg on the 6th (local time), the Eurozone composite PMI for December surveyed by IHS Markit recorded 50.9. It slightly improved from 50.6 in the previous month and exceeded the forecast (50.6). This was largely due to the improvement in the services PMI. The Eurozone services PMI rose from 52.4 to 52.8.

The PMI is an economic indicator released by surveying purchasing managers of companies about economic outlook. A value above 50 indicates economic expansion, while below 50 indicates economic contraction.

The PMIs of individual European countries also rose simultaneously. The December composite PMI of Germany, compiled by IHS Markit, was 50.2, surpassing the 50 mark. The previous month's PMI was 49.4, indicating that companies predicting economic contraction were in the majority. Germany also raised its composite PMI as the services PMI increased from 52.0 to 52.9.

The composite PMI of the UK announced on the same day also rose to 49.3 from 48.5 in the previous month. The UK services PMI rose from 49.0 in the previous month to 50.0.

As concerns about a global economic recession began to fade at the end of last year, indicators showed improvement, and the Eurozone also showed a trend of improved business sentiment indicators across the board.

However, Bloomberg pointed out that the Eurozone’s manufacturing sector is still rapidly declining, and the growth rate is bottoming out, causing the Eurozone economy to stagger. IHS Markit had predicted the Eurozone’s economic growth rate for the fourth quarter of last year to be 0.1%.

Externally, expectations for the US-China Phase One trade agreement have somewhat dispelled the "ghost of recession," but analyses suggesting that rapid improvement will be difficult are gaining traction. If tensions between the US and Iran escalate, increasing risks in the Middle East, the economy could fall back into recession. On this day, European stock markets showed a sharp decline of more than 1% immediately after opening.

This content was produced with the assistance of AI translation services.