Eurozone companies are bracing for subdued economic momentum this year after activity slipped to a four-year low at the end of last year.
Growth in manufacturing and services slowed more than initially reported last month, weighed down by public protests in France, Germany’s continued struggles in the car industry and renewed weakness in Italy.
Composite gauges for output expectations and new orders were the worst since late 2014.
“Companies are not anticipating any imminent revival in demand,” IHS Markit chief business economist Chris Williamson said.
“Worries reflect multiple headwinds from trade wars, Brexit, heightened political uncertainty, financial-market volatility and slower global economic growth,” he said.
The European Central Bank acknowledged all those risks last month when it downgraded its forecast of economic expansion in the 19 countries of the eurozone fot this year.
Still, policymakers decided to end asset purchases, pushing ahead with plans for a gradual reduction in monetary stimulus.
That was before data showed growth slowing further.
The IHS Markit purchasing managers’ index (PMI) for eurozone factories and services stood at 51.1 last month, down from 52.7 in November last year.
While the readings suggest that the economy grew by about 0.3 percent last quarter, the momentum was only half that pace last month.
One mildly encouraging spot of news came from the Italian survey, which indicated that private-sector activity unexpectedly stopped shrinking last month as the services sector grew at the fastest pace in three months. The PMI reading was 50, the dividing line between growth and contraction.
Still, in a warning for governments facing the rise of populist parties and with European Parliament elections this year, a gauge of eurozone job growth hit a two-year low.
“The eurozone economy moved down another gear,” Williamson said. “Employment growth has already taken a knock as companies take a more cautious approach to hiring in the face of weaker order books.”
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