Eurozone December Flash PMI: Enterprise continues to shrink

A general view of the cafes on the empty Leidseplein square on March 27, 2020 in Amsterdam, Netherlands

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LONDON – Business in the Eurozone is quite robust in December, according to the latest preliminary purchasing managers’ index (PMI) for the region.

The Flash Eurozone PMI Composite Output Index, which tracks activity in both manufacturing and services, was 49.8 in December, compared with 45.3 in November. However, a value below 50 still indicates a decline in business activity.

Commenting on the Flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said, “The eurozone economy is doing better than expected in December.”

“The data suggests the economy is on the verge of stabilizing, having slumped again in November due to renewed Covid-19 lockdown measures. The fourth quarter downturn therefore appears to be far less steep than the impact the pandemic at the beginning of the year The picture is very mixed by sector. “

The euro was up against the dollar at $ 1.22 and up 0.15% against the pound sterling. This was supported by news that progress had been made in post-Brexit trade agreement negotiations between the EU and the UK

Last month’s reading was the lowest for the index in six months, down from 50 in October.

The eurozone economy was widely expected to have received another blow from a new round of lockdowns imposed amid a second wave of coronavirus infections.

There have been plans to relax the rules over Christmas to allow families to congregate, but several governments, including Germany and the Netherlands, have instead tightened restrictions due to an increase in cases.

Germany put further restrictions in place on Wednesday, closing schools and non-essential businesses. This is on top of the closings of restaurants, bars and leisure centers that have been closed since November. The German health authority, the Robert Koch Institute, has announced 27,728 new infections in the last 24 hours, which corresponds to a total of 1,379,238. “We are forced to take action,” said Chancellor Angela Merkel last Sunday when further restrictions were announced.

According to the World Health Organization, Europe has recorded over 22 million cases of coronavirus and over 493,000 deaths from the virus since the pandemic hit the region in the spring.