Eurozone growth now at slowest pace in four years, surveys show

The composite Purchasing Managers' Index slumped to 51.3 in December, the weakest reading since November 2014

Eurozone economic growth is at its slowest pace in four years according to the latest round of industrial surveys of firms in the single currency area.

IHS Markit’s Flash Composite Purchasing Managers’ Index slumped to 51.3 in December, the weakest reading since November 2014.

That was down from 52.7 previously and well below economic analysts’ consensus expectations that it would show a rise to 52.8.

The euro fell by more than 0.5 per cent against the dollar in the wake of the release to trade at $1.1286

The data for France, which has been beset by “gilets jaunes” protests for a month, showed that the private sector there is contracting for the first time in two and a half years.

The survey also suggested that growth in Germany, the motor of the single currency zone, was at a four-year low.

On Thursday the European Central Bank formally ended its €2.6 trillion money printing programme, but the ECB also cut its eurozone GDP growth forecasts for this year and next, with its president, Mario Draghi, warning of the threat posed by Donald Trump’s trade wars.

Chris Williamson of IHS Markit said that while GDP growth in the fourth quarter as a whole is indicated at almost 0.3 per cent, the surveys point to quarterly GDP growth momentum slipping closer to 0.1 per cent in December alone.

“Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area,” he said.

“While the ECB was relatively optimistic about the growth outlook yesterday, today’s PMI adds to the worries,” said Bert Colijn at ING.