The euro zone economic recovery weakened this month, despite an upturn in Germany where factories benefited from an easing in supply chain bottlenecks, as renewed restrictions put a dent in the bloc's dominant services industry, a survey showed.
grew at the fastest pace in four years although activity in the private sector as a whole slipped into contraction for the first time in four months as the services industry suffered amid a surge in coronavirus cases.Consumers were also hit by rocketing prices. The euro zone composite output prices index matched November's survey high, and comes afterhit a record last month, likely adding pressure on the European Central Bank to tighten policy.
Factories, however, are less affected by restrictions and have largely remained open. The bloc's manufacturing PMI rose to a five-month high of 59.0 from 58.0, well ahead of the 57.5 Reuters poll estimate. An index measuring output jumped to 55.8 from 53.8. The output measure feeds into the composite PMI and its big increase shows how much impact the services decline had on overall activity.
"The major news out of the release is that manufacturers are again noticing some abatement in supply chain problems. After cautious signs of improvements in December, things have materially improved in January," Colijn said. To meet buoyant demand factories increased headcount at a rapid pace. The employment index soared to 57.5 from 55.3, its highest since July.last week found more than two-thirds of economists saying the Omicron variant would have a milder economic impact than Delta, and with the vaccine programme in the region continuing, optimism improved.
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