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Business activity in the 19-country Eurozone began this year at its slowest pace since February 2021.
IHS Markit’s Eurozone purchasing managers index (PMI), a measure of business activity’s momentum, slowed from 53.3 in December to 52.4 last month, slightly worse than analysts had expected.
A score above 50 signals growth, with higher numbers indicating more robust activity.
The survey also found that average prices charged for goods and services grew year over year in January at their fastest clip since 2002, depressing business activity generally as companies and customers tightened their belts.
Inflation across the zone ran at 5 percent in December, a record since the euro common currency was implemented in 1999.
The service sector’s PMI registered 51.2, a nine-month low, as Omicron-related restrictions hobbled trade, especially in hospitality businesses where staff shortages also ate into revenue.
In contrast, manufacturing’s PMI climbed to a five-month high of 59 as supply chain knots began to loosen and back orders began to be filled.
Germany turned in what IHS called a “surprisingly resilient performance,” notching a PMI of 54.3, its best since September. The rise in activity “cast doubt over predictions Germany could slide into recession,” the Financial Times said.
In France, business activity ground to its slowest in nine months, with a PMI of 52.7, down from 55.8 last month. The government imposed new restrictions last month during the Omicron onslaught and has yet to lift them.
However, France’s overall 2021 results outshone its Eurozone partners (see related story in this issue.)
TREND FORECAST: Until nations relax COVID War restrictions and draconian mandates, Europe’s economic output will continue to lag that of China and the United States.
While some countries, such as Denmark are loosening up, others like Italy are tightening up with vaccine requirements and fines for the unvaxxed.
The European Central Bank (ECB) faces the same choice as the U.S. Federal Reserve: raise interest rates to cool inflation or leave rates low to spark a sluggish economy.
However, despite the ECB’s negative interest rates, the cheap money flow still has not sparked an economic renaissance. And, they have kept interest rates low even though Euro area annual inflation was 5.0 percent in December 2021.
The ECB will hold policy until, and probably after, low rates and quantitative easing become obviously untenable. No one knows when that will be. Since, like the rest of the Bankster shills, the ECB had long claimed that when inflation hit their 2 percent target, that would pressure them to raise interest rates… which they have not done.