LONDON, Jan 24 (Reuters): Euro zone businesses faced a tough start to 2024 with activity contracting again in January as demand continued to fall while price pressures rose due to tensions in the Red Sea, a survey showed.
The manufacturing outlook did improve somewhat but remained in contractionary territory and was partly offset by a steeper decline in the bloc's dominant services industry.
HCOB's preliminary euro zone Composite PMI, compiled by S&P Global, rose to 47.9 this month from December's 47.6, just shy of expectations in a Reuters poll for 48.0 but marking its eighth month below the 50 level separating growth from contraction.
"Today's data confirm our view that the economic weakness in the euro area will last longer than expected by the majority of economists and the ECB," said Christoph Weil at Commerzbank.
According to a recent Reuters poll the bloc was predicted to expand 0.1 per cent this quarter.
Germany and France, the 20-country currency union's biggest economies, both saw an improvement in their manufacturing PMIs but a deterioration in their services ones.
British services firms saw another pick-up in growth this month, adding to signs of a modest recovery in the sluggish economy, although struggling factories are now being hit by the inflationary impact of tensions in the Red Sea.
Attacks by Yemen's Iran-aligned Houthis in the Red Sea are disrupting shipping and the delivery times index in the euro zone factory PMI dropped significantly and was below 50 for the first time in a year.
The European Union faces a risk of consumer prices surging and growth slowing due to these disruptions, though it has yet to feel an economic impact, a top EU official said on Tuesday.
Euro zone business downturn eases in Jan
FE Team | Published: January 24, 2024 23:17:59
Euro zone business downturn eases in Jan
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