THE EURO zone’s dominant service sector expanded much slower than expected this month but its manufacturing sector, which led a large part of the economic recovery, grew faster than thought, surveys showed.
Worryingly for policymakers, a large part of the strength was on the back of a very positive performance in Germany and a supportive France, which outshone other member states.
Possibly the divergence is growing wider. Growth in Germany is near a record rate . . . France has been a strong performer as well as far as PMIs go,” said Chris Williamson at Markit.
“When you strip France and Germany out of the euro zone figures we can see that in December growth of activity across services and manufacturing slowed down almost to stagnation.”
Markit’s Eurozone Flash Services Purchasing Managers’ Index, made up of surveys of around 2,000 businesses ranging from banks to restaurants, slumped to 53.7 from November’s 55.4.
The index has now been above the 50.0 mark that divides growth in business activity from contraction since September 2009.
The manufacturing sector saw activity pick up faster than expected, driven by a buoyant Germany and strong new orders.
The Flash manufacturing index rose to its highest level since April at 56.8 from 55.3 in November, confounding forecasts for a fall to 55.2, while the output index bounced to 57.8 this month from 55.8 in November. – (Reuters)
