The euro zone economy closed out 2024 on shaky ground, with economic activity contracting for the second consecutive month in December. A report revealed that while the services sector showed a modest recovery, it wasn’t enough to offset the steep decline in manufacturing, leaving the overall economy in a fragile state.
The final composite Purchasing Managers’ Index (PMI) for December, compiled by S&P Global, edged up to 49.6 from November’s 48.3, indicating that economic conditions are still contracting. Although this was a slight improvement over the preliminary estimate of 49.5, it remained below the critical 50-point mark, which separates growth from contraction. Due to the holiday season, the survey was conducted earlier than usual, between December 5-18.
The services sector was a bright spot, with its PMI rising to 51.6 from November’s 49.5, signaling a return to growth. However, the manufacturing sector continued to struggle, dragging down the overall index. According to Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, while December’s PMI doesn’t suggest an immediate boom for the service sector in 2025, there are some signs of improvement. Incoming business has stopped declining, and the fall in order backlogs has softened, providing a glimmer of hope for the year ahead.
In summary, while the euro zone’s services sector showed resilience, the broader economy remains in a fragile position, and its future prospects are uncertain as manufacturing woes persist.
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PRESS UPDATE