EU business activity in December above expectations-report
2022.12.17 14:08
EU business activity in December above expectations-report
Budrigannews.com – A survey released on Friday revealed that business activity in the Eurozone fell at the slowest rate in four months in December, indicating that a potential recession will be less severe than previously thought. Meanwhile, prices increased at the slowest rate in about a year.
Global S&P (NYSE:) The flash Composite Purchasing Managers’ Index (PMI), which is regarded as a reliable indicator of the state of the economy as a whole, increased to a four-month high of 48.8 this month from 47.8 in November, exceeding the median Reuters poll prediction of 48.0.
However, December marked the sixth month in a row in which growth was separated from contraction below the 50 threshold—the longest downward streak since June 2013.
“We are encouraged that the recession in the Euro Area will be very mild by the rise in the purchasing managers’ indices.” By the by, we shouldn’t celebrate too early. According to Commerzbank senior economist Christoph Weil (ETR:), “the economic environment has significantly clouded.”
Despite this, a sister survey revealed that falling price pressures bolstered the perception that a milder recession is on the horizon, and the downturn in German economic activity eased for the second consecutive month.
However, French business activity decreased at a faster rate, adding to indications that the euro zone’s second-largest economy faces a recession as businesses are impacted by inflation.
Andrew Kenningham, Capital Economics’ chief Europe economist, stated, “The flash PMIs for December provide more evidence that businesses in some parts of the euro zone have become a bit less gloomy about their current situation – but they still point to a combination of recession and very high inflation.”
The European Central Bank raised its key deposit rate on Thursday from 1.5 percent to 2%, hinting that more would follow because inflation is still much higher than its target rate of 2%, despite the growing likelihood of an economic downturn.
A Reuters poll found that demand is likely to weaken further as a result of higher interest rates and concerns about the cost of living. The poll also found that the economy would contract this quarter and next, meeting the technical definition of a recession.
The downturn has eased slightly this month in Britain, which is not a member of the European Union, and businesses have reported the lowest cost pressures since the middle of 2021. In general, the survey was consistent with other indications that the economy is contracting slowly.
As a result of rising energy costs as a result of Russia’s war in Ukraine, price growth in the bloc slowed down and private sector new orders fell at a slower rate. The PMI subindex that tracks output prices was at its lowest level in a year, despite the fact that input prices increased at the slowest rate since May 2021.
“The euro zone PMI increased in December, which is some positive news for once. Expansion constrains keep on blurring because of lower interest and directing production network issues. “Bert Colijn, a senior economist at ING, stated, “The latter adds to doubts about the ECB’s yesterday’s hawkish tone.”
The level of optimism regarding future output reached a four-month high. However, businesses were compelled to cut back on staff at the second-weakest rate since February 2021 due to falling demand.
The headline index rose to 49.1, the highest level since August, despite a decline in the bloc’s dominant services sector. The Reuters survey had anticipated no change from last month’s perusing of 48.5.
The fundamental file following assembling action rose to 47.8, contrasted with the Budrigantrade survey gauge and November’s 47.1, driven by better stock circumstances and melting away worries over energy imperatives.
More Italy in 2023-Economy falling inflation rising
An index measuring output, which is incorporated into the composite PMI, increased to a six-month high of 47.9, despite the fact that prices increased at their slowest rate in approximately two years.
