Eurozone private sector expands at slower pace in January

The HCOB Eurozone Composite PMI Output Index compiled by S&P Global edged down to 51.3 in January from 51.5 in December, signalling the weakest pace of expansion since September, while still pointing to growth for a thirteenth consecutive month. The loss of momentum was led by a slowdown in services activity, which outweighed a fresh upturn in manufacturing output. Demand remained fragile, with new orders barely increasing, and private sector employment largely flat as manufacturing job cuts offset modest hiring in services.

Despite softer current conditions, business sentiment improved. Eurozone firms reported their strongest expectations for activity growth since May 2024, although confidence levels remained below the long-run average, S&P Global said in a press release.

Eurozone private sector growth slowed again in January, with the Composite PMI easing to 51.3, its weakest expansion since September.
Services-led softness offset manufacturing gains, while new orders and employment remained subdued.
Despite fragile demand, business optimism improved to its strongest since May 2024.
Inflation pressures intensified, with input costs and output charges rising sharply.

Input cost inflation rose for a third successive month to an eleven-month high, while output charges increased at their fastest pace in nearly a year. Both indicators remained well above their respective historical averages, pointing to a renewed build-up of inflationary pressures.

Among the major eurozone economies, Spain topped the index rankings with a reading of 52.9, despite marking a seven-month low. Germany followed with an index of 52.1, a two-month high but slightly below its flash estimate of 52.5. Italy posted a Composite PMI of 51.4, also a two-month high, while France slipped into contraction territory at 49.1, its weakest level in three months and below the earlier flash reading of 48.6.

“Service companies in the eurozone have expanded their business activities for the eighth month in a row. The growth trajectory can be described as decent, but the situation is still not comfortable. Companies hardly hired any new staff in January. The fact that new business barely grew also shows that the recovery in this sector is still fragile,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

The survey data were gathered between January 12 and 27, 2025.

Fibre2Fashion News Desk (SG)