Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

My Logins

All Customer Logins
S&P Global Market Intelligence

  • S&P Global
  • S&P Dow Jones Indices
  • S&P Global Engineering Solutions
  • S&P Global Market Intelligence
  • S&P Global Mobility
  • S&P Global Commodity Insights
  • S&P Global Ratings
  • S&P Global Sustainable1
Close
Discover more about S&P Global’s offerings
Investor Relations
  • Investor Relations Overview
  • Investor Presentations
  • Investor Fact Book
  • News Releases
  • Quarterly Earnings
  • SEC Filings & Reports
  • Executive Committee
  • Corporate Governance
  • Merger Information
  • Stock & Dividends
  • Shareholder Services
  • Contact Investor Relations
Languages
  • English
  • 中文
  • 日本語
  • 한국어
  • Português
  • Español
  • ไทย
About
  • About Us
  • Contact Us
  • Email Subscription Center
  • Media Center
Product Login
S&P Global Market Intelligence
  • Who We Serve
  • Solutions
  • News & Insights
  • Events
  • Product Login
  • Request Demo
  •  
    • Academia
    • Commercial Banking
    • Corporations
     
    • Government & Regulatory Agencies
    • Insurance
    • Investment & Global Banking
     
    • Investment Management
    • Private Equity
    • Professional Services
  • Workflow Solutions
    • Capital Formation
    • Credit, Risk, & Regulatory Solutions
    • Data & Distribution
    • Economics & Country Risk
    • ESG & Sustainability
    • Financial Technology Solutions
     
    • Issuer & IR Solutions
    • Leveraged Loans
    • Post Trade Processing
    • Private Markets
    • Risk, Compliance, & Reporting
    • Supply Chain
    Products
    • S&P Capital IQ Pro
    • S&P Global Marketplace
    • China Credit Analytics
    • Climate Credit Analytics
    • Credit Analytics
    • RatingsDirect ®
    • RatingsXpress ®
    • 451 Research
    See More S&P Global Solutions
     
    • Capital Access
    • Corporate Actions
    • KY3P ®
    • EDM
    • PMI™
    • BD Corporate
    • Bond Pricing
  • Content
    • Latest Headlines
    • Blog
    • Research
    • Videos
    • Podcasts
    • Infographics
    • Newsletters
    • Client Case Studies
    SECTOR-SPECIFIC INSIGHTS
    • Differentiated Data
    • Banking & Insurance
    • Energy
    • Maritime, Trade, & Supply Chain
    • Metals & Mining
    • Technology, Media, & Telecoms
    • Investment Research
    • Sector Coverage
    • Expert Directory
    More ways we can help
    NEWS & RESEARCH TOPICS
    • 2023 Big Picture Outlook
    • Credit & Risk
    • Cryptocurrency
    • Economics & Country Risk
    • Maritime & Trade
    • M&A
    • Sustainability & Climate
    • Technology
    • U.S. Elections
    See More
    • All Events
    • Webinars
    • Webinar Replays
    Featured Events
    Webinar ReplaysLooking Ahead: Next Generation Climate Risk Models
    • 10/27/2022
    • On-Demand
    • 45 minutes
    An Era of Change: Navigating Global Disruption & Transformation

    S&P Global Market Intelligence is excited to present our in-person event, An Era of Change: Navigating Global Disruption & Transformation, in New York City on April 26, 2022.

    WebinarHow Automated Early Warning Indicators Can Help You Navigate Economic Uncertainties Ahead
    • 11/09/2022
    • Live, Online
    • 10:00 - 11:00 am EDT
  • Platforms
    • S&P Capital IQ Pro
    • S&P Capital IQ
    • S&P Global China Credit Analytics
    Other Products
    • Credit Analytics
    • Panjiva
    • Money Market Directories
     
    • Research Online
    • 451 Research
    See All Product Logins

Eurozone growth at nine-month low in December as fourth COVID-19 wave hits, price pressures and supply constraints ease

16 December 2021 Chris Williamson

The eurozone economy is being dealt yet another blow from COVID-19, with rising infection levels dampening growth in the service sector in particular to result in a disappointing end to 2021. Germany is being especially hard hit, seeing the economy stall for the first time in a year-and-a-half, but the growth slowdown is broad based across the region.

Encouragement comes from the manufacturing sector, however, where the strain on supply chains is showing some signs of easing, in turn helping to revive factory production. These easing supply constraints have alleviated some of the upward pressures on inflation, though the overall rate of price increase in December was still the second highest on record. While inflation could soon peak, the rate of increase remains elevated.

Looking ahead, the Omicron variant poses downside risks to the growth outlook as we head into 2022, and any accompanying disruption to supply chains could result in price pressures spiking higher again.

Economy slows in December

The headline IHS Markit Eurozone Composite PMI® dropped two points from 55.4 in November to 53.4 in December, according to the 'flash' reading*, indicating an easing in the rate of output growth to the lowest since March. The decline takes the average reading for the fourth quarter to 54.3, substantially lower than the 58.4 average seen in the third quarter. As such the PMI data point to a marked weakening of economic growth in the closing quarter of 2021, albeit with the rate of growth remaining above the survey's pre-pandemic long-run average of 53.0.

Service sector hit by COVID-19

The December slowdown was led by the service sector, where business activity grew at the weakest rate since April. Slower service sector activity growth was in turn led by a steep fall in tourism and recreation activity of a similar magnitude to the declines seen at the start of the year amid rising COVID-19 infection rates and associated restrictions across the region. Inflows of new business into the service sector also slowed, dropping to the lowest since the recovery from early-2021 lockdowns began in May.

Manufacturing output growth meanwhile picked up, the factory sector outpacing services for the first time in five months, yet remaining well below rates of expansion seen earlier in the year. Despite manufacturers reporting a weakening of new order growth, December saw the largest expansion of production since September thanks to an easing of supply constraints.

Germany stalls

By country, growth stalled in Germany due to the first drop in new orders for goods and services since June 2020, ending a 17-month recovery. A renewed fall in service sector activity outweighed a pick-up in manufacturing production growth.

France meanwhile continued to grow at a solid pace, albeit down on November, as a relatively resilient service sector helped offset a decline in manufacturing output for the second time in the past three months.

The rest of the region recorded the slowest expansion since April, with growth moderating in both manufacturing and services, though rates of increase remained well above long-run averages.

Supply constraints show signs of easing, driving record inventory build

Although supply chain delays continued to run far higher than anything seen prior to the pandemic, the lengthening of delivery times in December was the least marked since January. Input buying consequently rose at the fastest pace since August and pre-production inventories grew at a rate unprecedented in more than two decades of survey history, facilitating higher output in many firms.

Near-record price hikes

Inflationary pressures meanwhile cooled, attributed in part to the easing of supply constraints recorded during December. Manufacturing input costs inflation consequently eased slightly to show the smallest monthly rise since September.

However, although input costs and average selling prices measured across both manufacturing and services both grew less steeply than in November, both series still showed the second fastest rates of increase recorded in the history of the survey. Companies reported that higher shipping costs, rising energy prices and increases in staff costs again added to the upward pressure on prices.

Outlook

The December flash PMI and Omicron news add downside risk to IHS Markit's November forecast, which put eurozone real GDP growth at a little under 0.5% q/q in the fourth quarter of 2021 and the first quarter of 2022, which was already much slower than the average growth rate of over 2% seen in the second and third quarters of 2021. We now expect growth of 0.3% in the final quarter of 2021 and the opening quarter of 2022.

The lower PMI numbers for output and prices will, combined with the additional uncertainty for the outlook generated by the rise of the Omicron variant, add to the odds of the ECB restraining from any imminent withdrawal of stimulus.

Moreover, we believe that the ECB will be ready to act if financial conditions deteriorate. The sharp increase in inflation clearly limits the ECB's ability to use monetary policy to support the economy, but measures such as the implementation of a 'standby' asset purchase programme, an increase in net purchases, or the injection of some flexibility to asset purchases remain on the table.

*The flash estimate is typically based on approximately 85%-90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.

Chris Williamson, Chief Business Economist, IHS Markit

Tel: +44 207 260 2329

chris.williamson@ihsmarkit.com


© 2021, IHS Markit Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

Learn more about PMI data

Request a demo


This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

Previous PMI Post All PMI Next PMI Post

Related Posts

  • Week Ahead Economic Preview: Week of 30 January 2023
  • US January's flash PMI data add to recession signals, but also point to rising cost pressures
  • Eurozone recession risks fade as PMI returns to growth territory in January
  • Flash UK PMI data signal steeper economic decline at start of year, but prospects brighten
  • Week Ahead Economic Preview: Week of 23 January 2023
  • Philippines economy shows strong expansion
  • Recession risks and inflation indicators: previewing January's US flash PMI data
  • Singapore economic expansion moderates as global economy slows

Explore

RELATED INDUSTRIES & TOPICS
  • PMI
  • Purchasing Managers’ Index (PMI)

Recommended for you

  • Purchasing Managers’ Index® (PMI®)
  • Indices
  • Economics & Country Risk

Investment Manager Index (IMI) Survey

Unlock comprehensive monthly insights into investor sentiment
Sign up participate
Subscribe to RSS Feed

Follow Us

Jan 27
SPGlobalPMI@SPGlobalPMI

📆 Preview the week ahead with us as we await the release of January manufacturing and services #PMI data and the hi… https://t.co/KFHFA2l7B9

Jan 27
Jan 26
SPGlobalPMI@SPGlobalPMI

#PMI #FactoftheWeek According to our Jan flash PMIs, for the first time on record, #eurozone business activity expa… https://t.co/nIDzxXIS3D

Jan 26
Jan 25
SPGlobalPMI@SPGlobalPMI

🇺🇸 The #US began 2023 on a sour note, according to initial #PMI indicators, with business activity contracting shar… https://t.co/SrXLGgGmsZ

Jan 25
Jan 25
SPGlobalPMI@SPGlobalPMI

🇬🇧 Weak #PMI numbers in January underline the risk that the #UK will slip into a recession, amid industrial dispute… https://t.co/pH2YAeKQns

Jan 25
{"items" : [ {"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2feurozone-growth-at-ninemonth-low-in-december-as-fourth-covid19-wave-hits-price-pressures-and-supply-constraints-ease-Dec21.html","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2feurozone-growth-at-ninemonth-low-in-december-as-fourth-covid19-wave-hits-price-pressures-and-supply-constraints-ease-Dec21.html&text=Eurozone+growth+at+nine-month+low+in+December+as+fourth+COVID-19+wave+hits%2c+price+pressures+and+supply+constraints+ease+%7c+S%26P+Global+","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2feurozone-growth-at-ninemonth-low-in-december-as-fourth-covid19-wave-hits-price-pressures-and-supply-constraints-ease-Dec21.html","enabled":true},{"name":"email","url":"?subject=Eurozone growth at nine-month low in December as fourth COVID-19 wave hits, price pressures and supply constraints ease | S&P Global &body=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2feurozone-growth-at-ninemonth-low-in-december-as-fourth-covid19-wave-hits-price-pressures-and-supply-constraints-ease-Dec21.html","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=Eurozone+growth+at+nine-month+low+in+December+as+fourth+COVID-19+wave+hits%2c+price+pressures+and+supply+constraints+ease+%7c+S%26P+Global+ http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2feurozone-growth-at-ninemonth-low-in-december-as-fourth-covid19-wave-hits-price-pressures-and-supply-constraints-ease-Dec21.html","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"} ]}
Filter Sort
  • About Us
  • Quality Program
  • Contact Us
  • Email Subscription Center
  • Press Releases
  • Careers
  • Corporate Responsibility
  • Our History
  • Investor Relations
  • Leadership
  • © 2022 S&P Global
  • Terms of Use
  • Cookie Notice
  • Privacy Policy
  • Disclosures
  • Do Not Sell My Personal Information