Eurozone Private Sector Logs Steady Growth

(RTTNews) - The euro area private sector logged a steady growth in January as manufacturing output returned to growth, while the pace of expansion in services activity softened to a four-month low, flash survey results from S&P Global showed on Friday.

The HCOB flash composite output index registered 51.5 in January, unchanged from December. The score was forecast to rise marginally to 51.6.

However, the score signaled the joint-slowest growth since last September. That said, output has increased in each of the last 13 months.

Although the service sector sustained growth in January, the pace of expansion slowed to a four-month low. At the same time, manufacturing production returned to growth following a first drop in output for ten months.

"The recovery still looks rather feeble," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said. Overall economic growth remains unchanged, the economist noted.

"… the start into the new year points to more of the same in the months to come," added de la Rubia.

Overall activity increased driven by higher new orders, while optimism in the outlook hit a 20-month high. Data showed that companies reduced their staffing levels for the first time in four months amid marked job reductions in Germany.

Regarding prices, the survey showed that both input and output prices logged faster growth. Selling price inflation hit the highest since April 2024.

Germany's economy started the New Year on a growth path, while monthly output in France deteriorated.

Driven by higher output and renewed rise in new orders, Germany's private sector grew at a faster pace in January. The HCOB composite output index posted 52.5 in January, a three-month high, exceeding the forecast of 51.8 from 51.3 in December.

The services Purchasing Managers' Index advanced unexpectedly to 53.3 from 52.7 in the previous month. The score was forecast to fall to 52.6. The manufacturing PMI rose to a three-month high of 48.7 from 47.0 in the prior month. The reading was seen falling to 47.8.

The French private sector experienced a contraction in January as clients were hesitant to place orders amidst the ongoing political deadlock regarding the country's fiscal plans.

The HCOB flash composite output index fell to 48.6 in January from 50.0 in December. Economists had forecast the index to rise to 50.1.

The index has remained below the no-change threshold for the first time since October last year.

The services PMI dropped unexpectedly to a nine-month low of 47.9 in January from 50.1 in the previous month. The score was seen at 50.3. On the other hand, the factory PMI rose to 51.0 from 50.7 in the prior month. The index was forecast to fall to 50.4 in January.