Eurozone business activity shrank for the tenth month running in December, according to the latest purchasing managers index (PMI). The composite PMI, compiled by Markit, remained below the 50 mark that separates growth from contraction, coming in at 47.9. This indicates the Eurozone is still mired in recession.
The manufacturing sector experienced a particularly sharp downturn, with output falling at the fastest rate in three months. Services activity also declined, albeit at a slightly slower pace.
Germany, the Eurozone’s largest economy, saw a slight improvement in its PMI, but it remained below 50. France, the second-largest economy, continued to struggle, with its PMI falling further into contraction territory.
Economists warn that the ongoing contraction in business activity raises concerns about the Eurozone’s ability to recover from its debt crisis. The weak data is likely to put pressure on the European Central Bank to take further action to stimulate the economy.
Key factors contributing to the downturn include:
- Weak global demand
- Government austerity measures
- High levels of debt
- Uncertainty about the future of the Eurozone
The latest PMI data paints a bleak picture of the Eurozone economy and suggests that the region faces a challenging road ahead.
