Euro Business Activity Stagnates

If euro zone business activity were an airplane, it would have stalled out last month and be at risk of plummeting toward the ground.  The problem is manufacturing, which has dragged down the services industry as well as the entire economy.

The IHS Markit’s Purchasing Manager’s Index remained steady at 50.6, right on the dividing line between growth and contraction.

Chris Williamson, chief business economist at IHS Markit, said:

The headline figure “still indicates a near-stagnant economy,” and the data pointed to fourth quarter GDP growth of 0.1%, with manufacturing continuing to act as a major drag.

“Worryingly, the service sector is also on course for its weakest quarterly expansion for five years, hinting strongly that the slowdown continues to spread.” .

There was a slight glimmer of hope.  The New Business Index climbed just over 50 from 49.6.  It wasn’t much, but the Continent can use any good economic news it can get.

Williamson said:

“New orders have not shown any growth since August, underscoring the recent weakness of demand, with sharply declining orders for manufactured goods accompanied by substantially weaker gains of new business into the service sector.”

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