PMI drops to over five-year low at start of 2019
Leading data suggests that the Euro area’s economy started the year on a sour note. The Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, fell from December’s 51.1 to 50.7 in January—the worst result since July 2013. As a result, the composite PMI lies close to the 50-threshold that separates expanding business activity from contracting in the Eurozone.
Both the manufacturing and services sectors PMIs fell in January, leading to the composite index’s decrease. New business inflows fell for the first time since November 2014 and exports recorded a fourth successive contraction. In addition, job growth lost steam, with the services sector particularly hard-hit. That said, business optimism rose slightly in January, although remained near a four-year low. On the price front, input cost inflation fell to an almost one-and-a-half year low.
Regarding the two largest Eurozone economies, France’s composite PMI fell to an over four-year low in January amid a tough domestic backdrop partially due to the ‘yellow vests’ protests. In contrast, Germany’s PMI edged up, although remained at a weak level given recent data. Elsewhere in the region, output growth dropped to the lowest level seen since November 2013.