Business activity in the eurozone bounced back in January after a two-month contraction, as the pace of decline eased in the manufacturing sector, a closely watched survey showed Friday.
The HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global registered a figure of 50.2 for the single-currency area, after 49.6 in December.
Any reading above 50 indicates growth, while a figure below 50 shows contraction.
"The kick-off to the new year is mildly encouraging," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "The private sector is back in cautious growth mode after two months of shrinking."
"Germany played a major role in improving the eurozone economy," de la Rubia said, noting that business activity in the area's largest economy stabilised at the start of the year after six months of decline.
"In contrast, France's economy remained in contraction," he noted.
Overall, the improved eurozone dynamic was linked to timid improvements in manufacturing.
"The manufacturing sector is still in recession, but the pace of decline eased a bit," de la Rubia said.
The sector was still shedding staff "rapidly" with new orders still falling too, he added.
But "on the flip side, companies are much more optimistic about the future, envisioning higher output a year from now," de la Rubia said.
Services activity increased for the second month running in January, though modestly and slightly less than in December.
"Some positive news from the eurozone at last," commented Bert Colijn, chief economist at ING. "It's not much, but a small increase in the PMI to bring the level above 50 is at least something."
But Jack Allen-Reynolds of Capital Economics tempered that analysis, saying that the survey remained "consistent with the economy stagnating."
Allen-Reynolds predicted upcoming data to show the eurozone economy grew just 0.1 percent in the final quarter of 2024, and said January's PMI findings "point to a similarly poor performance" in the first quarter of 2025.
With AFP
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