EU PMI Falls in December After Bad Quarter

The eurozone economy saw anaemic growth in December and suffered its worst quarter for more than a year, a survey has indicated.

The closely watched Markit/CIPS composite purchasing managers’ index (PMI) for December fell to 51.4 from an earlier estimate of 51.7.

But that was better than the previous month’s reading of 51.1, which had marked a 16-month low.

The eurozone economy has seen 18 months of continuous, albeit weak growth.

Markit said its latest PMI survey, which combines the results of individual surveys of the construction, services and manufacturing industries, suggested the eurozone economy grew by just 0.1% in the last three months of 2014.

Persistently low inflation since the start of last year has led consumers and business to hold off making purchases or making investments in the expectation that prices will continue to fall.

The problem has been exacerbated since the summer by the falling price of oil. Brent crude has fallen by more than 50% since August to $51.54 per barrel.

The fear of deflation led the European Central Bank (ECB) to lower interest rates to 0.05% and begin an asset purchase programme to inject cash into the economy in August.

However, the ECB has resisted taking the same action as central banks in the US, UK and Japan by buying government debt.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza