Eurozone Contraction in December is Deeper Than Expected

A survey showed that economic activity in the Eurozone recorded a more severe contraction than previously thought at the end of 2020 and may deteriorate further with the renewal of the general isolation restrictions imposed to contain the Coronavirus, which has affected the services sector that dominates the bloc.

With the increasing rate of injuries in Europe, countries imposed restrictions on public life, and Germany is moving to extend strict isolation measures until the end of the month, while Italy decided yesterday to continue some restrictions.

The final reading of the IHS Markit composite index of purchasing managers for December, which is a good indicator of the health of the economy, rose to 49 from 45 in November, but well below the initial reading of around 50.

The services PMI recorded more than 46 in December, better than the previous month at around 42 but much weaker than the initial estimate of more than 47.

But as vaccines are distributed across the continent, optimism generally improved for the next 12 months. The combined index of future production rose to more than 64, the highest reading since April 2018.