Eurozone Private Sector Continues to Lose Momentum

07 January 2008

HENLEY-ON-THAMES, UK: December saw an ongoing private sector slowdown in the Eurozone - the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area.

The headline Eurozone Composite Output Index, produced for the Royal Bank of Scotland by NTC Research, registered 53.3 last month, down from 54.1 in November. A reading of fifty indicates zero growth; less than 50 a decline.

Key findings for December are:

  • Output
    The manufacturing and service sectors in each of the big four euro-currency nations saw their strongest expansion in France. Germany enjoyed only modest output growth, with the rate of expansion slowing to a 28-month low, a marked easing in growth since the summer.

  • New Business
    December recorded the smallest increase in demand for goods and services since May 2005. Manufacturers reported a slightly stronger rise than service providers, though in both sectors the rates of increase were modest. Services recorded its weakest reading in over three years.

  • Work backlogs
    These rose only very marginally, posting the weakest rise since backlogs began rising in September 2005. A small rise in services was in part offset by a slight reduction in manufacturing.

  • Employment
    Growth in December was the weakest seen for a year. Although employment has now risen for twenty-eight successive months, the rate of job creation has eased steadily over the final five months of 2007 from July's six-and-a-half year high.

  • Input price inflation
    This fell below November's rate, but remained above the whole year average. Input cost inflation eased only slightly from November's seven-year high in services and was marked in manufacturing, as high oil prices continued to feed through to firms' costs.

  • Output price inflation
    This rose to a five-month high, but the rate of increase was below the average recorded for the year as a whole. A six-month high was seen in services and a five-month high in manufacturing.
The report features original survey data collected from a representative panel of over 5000 companies across the euro currency area.

The data for each country are combined using weights determined by national contribution of manufacturing output to total Eurozone manufacturing output.

For further information on the reports click here.

Data sourced from NTC Research (UK); additional content by WARC staff