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An important indicator for the eurozone economy rose to a two-month high in December, hinting that the region is beginning to stabilize amid lockdowns and rising coronavirus cases.
The flash eurozone composite purchasing managers index rose to 49.8 in December from 45.3 in November, and well ahead of consensus expectations of 45.8, according to a survey released by IHS Markit on Wednesday.
The flash eurozone services PMI rose to 47.3 from 41.7 in November, a three-month high, while the manufacturing PMI rose to a two-month high of 56.6 from 55.3 in November. Even more encouragingly, said IHS, future output expectations for the single-currency area jumped to a 32-month high.
“The data hint at the economy close to stabilizing after having plunged back into a severe decline in November amid renewed COVID-19 lockdown measures,” said Chris Williamson, chief business economist at IHS Markit. “The fourth-quarter downturn consequently looks far less steep than the hit from the pandemic seen earlier in the year, though the picture is very mixed by sector.”
Williamson said companies have become “increasingly optimistic” about 2021, encouraged by COVID-19 vaccine rollouts that will help business get back to normal trading conditions.
But Europe may face a tough Christmas period, with a strict lockdown in Germany, the Netherlands and parts of the U.K., including London. Social distancing measures will likely stay in place in the new year, “constraining the economy as we head into the new year,” said Williamson.
Germany’s composite PMI rose to a two-month high of 52.5, but its manufacturing output index fell to a four-month low of 61.4.
