Rising from previous month, manufacturing activity continued to contract for 7th consecutive month
Euro area manufacturing purchasing managers’ index (PMI) rose to 48.8 in January, hitting a five-month high, a US-based financial services provider revealed in a preliminary flash reading on Tuesday.
S&P Global said the figure was up from 47.8 in December 2022 and was still below the 50 threshold that separates growth from contraction for a seventh consecutive month.
The expectation for manufacturing PMI was for it to come in at 48.5.
Flash eurozone manufacturing output index rose to a seven-month high of 49 in January from 47.8 in December.
After six successive months of decline, business activity returned to growth in January with S&P Global flash eurozone PMI composite output index reaching 50.2.
January saw a rise in service sector activity for the first time since last July, with flash PMI of 50.7 this month.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said a steadying of the eurozone economy might suggest that the single currency zone might escape recession.
“The survey suggests that a nadir was reached back in October, since when fears over the energy market in particular have been alleviated by falling prices,helped by the warmer than usual weather and generous government assistance,” Williamson said.
He added that supply chain constraints eased and China’s lifting COVID-19 restriction served to restore confidence in the broader global economic outlook for 2023.
“The region is by no means out of the woods yet, however, as demand continues to fall – merely dropping at a reduced rate – and an upturn in the rate of inflation of selling prices for both goods and services will add encouragement to the hawks to push for further monetary policy tightening,” Williamson said.