Growth in the euro zone's dominant service sector held steady in December as weak consumer demand and high energy prices prevented any improvement from November's 15-month low, a survey of some 2,000 companies showed today.
The NTC Research Business Activity Index was unchanged at 52.6 in December, above the 50 mark between growth and contraction but below a Reuters consensus forecast of 53.0.
"The services economy seems to be suffering from the weakness in the manufacturing sector ..., consumer demand remains weak in most of the key euro zone economies, and companies are still operating in a high cost environment," said NTC's chief economist Chris Williamson.
NTC said that data from 2004 services surveys and companion indices on the manufacturing sector pointed to an annual rise of 1.9 percent in the euro zone's gross domestic product.
That represents a big improvement on the 0.5 percent growth posted in 2003, but Williamson said there was reason to be cautious about prospects for this year.
"There is evidence that the rate of growth has come down sharply since the summer and with the disruption caused in Asia there is potential further weakness in coming months," he said.
In the December survey firms were more upbeat about the future than they had been in the previous month, pushing up the business expectations index to 63.2 from a 20-month low of 61.4.
An improvement -- albeit marginal -- was also recorded in the new business index, which rose to 51.3 from 50.7.
"There are some glimmers of light ... but the rate of increase remains only very modest and certainly well down from that seen at the start of the year and even in the summer," Williamson said.
The input prices index slipped to an eight-month low of 58.0, but continued to point to a steep increase in costs.
The prices charged index edged up above the 50 mark for the first time since August to hit 50.1. But in the face of intense competition, service companies were unable to raise their prices by as much as they would have liked.