Eurozone Growth Shudders On Trade Worries, French Protests
Fakhir Rizvi Published December 14, 2018 | 06:42 PM
Global trade war fears and disruptions caused by anti-government protests in France pushed business growth in the eurozone to a four-year low in December, an influential survey showed Friday, raising concerns the region's economy might stall.
The slide in IHS Markit's composite eurozone PMI, to 51.3 points from 52.7 points in November, came just a day after the European Central Bank pulled its extraordinary support that has stoked growth in the single Currency area for the past three years.
While the reading above 50 points indicates business is still expanding, IHS Markit said new business inflows almost stalled, job creation slipped to a two-year low and business optimism deteriorated.
"An undercurrent of slowing economic growth was exacerbated by protests in France and on-going weak demand for autos," said the financial data firm.
The survey for France showed business there had flipped into reverse, as the index plunged to 49.3 in December from 54.2 in November.
The country has been swept by opposition to fuel taxes that have snowballed into broad protests against President Emmanuel Macron's pro-business agenda and his style of governing.
"While some of the slowdown reflected disruptions to business and travel arising from the 'yellow vest' protests in France, the weaker picture also reflects growing evidence that the underlying rate of economic growth has slowed across the euro area as a whole," said IHS Markit's Chief Business Economist Chris Williamson.
"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 added.
The data point to a weak economic expansion of 0.3 percent in the final quarter of the year for the eurozone, he said.
But December's data alone show GDP growth is slowing to a 0.1 percent rate, and forward-looking information such as orders and sentiment show demand growth is stalling, he added.
The flash reading of Germany's composite PMI dipped by a tenth of a percentage point to 52.2.
Michael Hewson, chief market analyst at CMC Markets UK, said the survey results showed the risks of a recession in the eurozone have risen, and "have put into sharp contrast the ECB's decision to stop its asset purchase program at the end of this month".
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