Eurozone Economic Rebound Beats Estimates in December, Remains in Contraction

Eurozone’s IHS Markit’s flash composite PMI was 49.8 in December, up from November’s 45.3, and above expected 45.8, reports Reuters. The economic rebound reflects the partial lifting of restrictions in countries like France, although it remained below the 50 mark that separates growth from contraction. 

• The service industry rose to 47.3, up from 41.7 to remain above analysts’ expected 41.9
• The employment index remained below breakeven at 49.4, but better than November’s 48.2.
• Flash manufacturing rose to 55.5, up from 53.8 in November, the highest since May 2018 to exceed the expected 53.0
• The output index rose to 56.6, up from 55.3 in November while the composite future output index  jumped from 60.4 in November to 63.8
• While the rise in economic activity has sparked optimism, attention now shifts to the tougher coronavirus containment measures stepped up in the Eurozone.
• Services activity is expected to remain weak due to coronavirus restrictions that could hold back Eurozone’s economic rebound.
• In Germany, the private sector remained resilient in manufacturing while the services partly recovered.
• Britain had the economy limp back to growth, although the hospitality businesses struggled while Brexit disruptions affected the factory supply chain.
• The rise in economic performance in the Eurozone provides hope that GDP won’t fall as much as 2.6% projected in the fourth quarter.

Eurozone stocks and the Euro are currently gaining. DAX is up 1.49%, FTSE 100 is up 0.66%, EURUSD is up 0.30%