Recovery in Eurozone Private Sector Eases Fear of Recession

Analysis

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Eurozone private sector moved into the expansion zone in January for the first time in seven months, raising hopes that the currency bloc would escape a recession, final survey results from S&P Global showed Friday.

At 50.3 in January, the composite output index climbed from 49.3 in December. The flash score was 50.2.

The renewed upturn in the private sector was exclusively fueled by services firms.

Meanwhile, manufacturing activity logged a mild contraction.

The services Purchasing Managers' Index (PMI) advanced to 50.8 in January from 49.8 in December. The reading exceeded the crucial 50.0 mark that separates expansion from contraction for the first time since July 2022.

The S&P survey suggested that the overall economic growth across the currency bloc was constrained by continued weakness in demand. Firms also reported challenging export market conditions. With rising business activity and a fall in new order intakes, companies made inroads into their backlogs. At the same time, the rate of job creation improved to a three-month peak as hiring activity strengthened across manufacturing and service sectors.

Input cost inflation slowed again in January to the weakest since April 2021. Meanwhile, there was a marginal rise in output charge inflation. Further, firms were more optimistic about their future.

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