Eurozone economy slows in December, recovery still on track: survey

Data monitoring company Markit said its closely watched Composite Purchasing Managers Index (PMI) slipped from 54.2 points in November to 54.0 in December, but it was still well above the 50-point boom-or-bust line.

“The eurozone economy enjoyed a comfortably solid end to 2015,” Markit’s chief economist Chris Williamson said in a statement.

But “policymakers are likely to remain disappointed by the relatively modest pace of expansion and lack of inflationary pressures” given the level of stimulus and the stage of economic recovery, Williamson said.

At the same time, “although the PMI edged lower in December, the fourth quarter as a whole saw the largest increase in business activity for four-and-a-half years,” Williamson said.

The European Central Bank launched an unprecedented one trillion euro stimulus programme earlier this year but some analysts believe that with inflation — a reflection of consumer demand — well below the ECB’s near two percent target level, there is much more to be done.

Inflation for November came in at 0.2 percent, according to official figures released separately, up from an initial 0.1 percent.

Williamson said the PMI report suggested the 19-nation eurozone economy expanded 0.4 percent in the last quarter, which would give full-year growth of 1.5 percent.

“Most encouraging of all is the upturn in the rate of job creation to the highest since spring 2011, which will hopefully pave the way for unemployment to start falling in earnest as we move into 2016,” he said.

The upturn suggests that economic growth could accelerate in the coming months, he added.

In a country breakdown, Markit said top exporter Germany recorded its strongest quarterly growth for a year and a half as Europe’s biggest economy rose gained 0.5 percent in the fourth quarter.

In France, by contrast, overall economic activity registered its weakest growth since August, at just 0.2 percent in the last quarter and slowing to near stagnation in December.

France’s economy, particularly its service sector, was hit by the November 13 Paris attacks which left 130 people dead.

The growth rate in France “bodes ill for the coming year, especially in the stalling service sector,” Williamson said.