Euro area – PMIs slightly better, but still far from good

Good news for the euro area economy just before Christmas: the Composite Purchasing Managers' Index for manufacturing and the services sector rose from 48.3 to 49.5 points in December, making up for part of the significant decline in November. However, the index is still in a territory where the euro area economy has mostly shrunk in the past, and the trend is still pointing downwards despite the increase in December.

A look at the two sectors shows a mixed development. The index for the service sector improved quite significantly from 49.5 to 51.4, signaling a slight expansion of the sector again. In contrast, the index for manufacturing stagnated at the low November level and, with a value of 45.2, signals a clear contraction in this sector.

However, there were differences between the individual countries. While the situation in German and French manufacturing continued to deteriorate and the index for both countries is well below the 50-point threshold at around 42 points, it has improved in the rest of the eurozone and is now probably only just below this threshold at around 49 points.

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