Eurozone Economy Experiences Record Drop in Early 2021

The flash Composite PMI for Eurozone fell from 49.1 in December to 47.5 in January, a third successive monthly decline, according to the IHS Markit press release. January’s PMI signals slowdowns in business activity and the steepest deterioration since November on fresh lockdowns amidst the new coronavirus strain.

• Flash Services PMI fell to 45.0 in January, down from 46.4 in December, a 2-month low.
• Flash Manufacturing PMI Output Index was 54.5, down from 56.3 in December, a 7-month low.
• Flash Eurozone Manufacturing PMI was 54.7 in January, down from 55.2 in December, a 2-month low.
• Factory output growth weakened to the slowest since the recovery began while the service sector saw output fall at the second-fastest rate since May.
• Business activity growth in Germany declined to the slowest since the recovery began in July
• The flash composite PMI for France fell from 49.5 in December to 47.0 in January, while the index for Germany slipped from 52.0 to 50.8.
• With the slowdowns in business activity in the eurozone, IHS Markit chief business economist Chris Williamson says a double-dip recession is “increasingly inevitable.”
• In addition to the new COVID-19 variants, there are also concerns about slow vaccination roll-outs in the European Union. 
• European Central Bank (ECB) president Christine Lagarde acknowledged that the pandemic still posed “serious risks” to the Eurozone economy.
• ECB expects Eurozone’s gross domestic product (GDP) to expand by 3.9% in 2021 and 2.1% in 2022, after contracting 7.3% last year, but growth will depend on the evolution of the pandemic. 

European stocks are currently declining as the Euro gains. DAX is down 0.62%, EURUSD is up 0.11%.