London - Tentative signs the eurozone may have passed the
worst of its downturn emerged in December but business surveys also suggested
Britain's economy tipped back into contraction in the final months of 2012.
Friday's purchasing managers indexes, which measure the
activity of thousands of companies worldwide, brought mixed news from Europe.
Activity in Britain's dominant services sector fell for the
first time in two years and at a faster pace than predicted by any analyst
polled by Reuters, while the speed of decline among French, Italian and Spanish
Data from the United States due later on Friday are expected
to show continued but modest jobs growth and a steady expansion of its services
With Chinese growth showing evidence of revival, that leaves
Europe as the world's economic slowcoach going into 2013.
In particular, economists were surprised by news the UK
services PMI slipped to 48.9 in December from 50.2 last month, sagging below
the 50 mark that divides from contraction for the first time in two years.
"The PMIs point to an economy that is contracting
modestly," said Rob Wood, chief UK economist at Berenberg Bank.
"The broader picture is that for some time the economy
has been bouncing around the bottom ... and I think this is likely to stay with
us for the next couple of quarters."
Survey compiler Markit said the figures suggest Britain's
economy shrank 0.2% in the final quarter of 2012, a slightly bigger drop than
most other private-sector forecasts.
The eurozone composite PMI hit its highest levels since last
March, rising to 47.2 in December from 46.5 in November, although it remained
rooted below the 50 mark for an 11th month.
"I think (the eurozone PMIs) are showing a decisive
bottoming-out of activity," said James Nixon, chief European economist at
"Now, the actual levels of the surveys are still
consistent with GDP declining, but at least things aren't getting worse any
The decline eased among the services firms that make up the
bulk of the eurozone's economy, ranging from banks to restaurants, but
manufacturers endured an awful end to 2012.
Survey compiler Markit warned that Friday's figures would
probably fail to prevent the eurozone's recession deepening in the fourth
quarter of last year, thanks to dismal figures in October and November.
"The surveys at least bring some substance to the
belief that the worst is over and that a return to growth is in sight for the
region in 2013," said Chris Williamson, chief economist at Markit.
As with last year, the eurozone economy's fate hinges on the
resolution of the sovereign debt crisis, which still smoulders despite the
creation of financial firewalls by the European Central Bank and European
German Finance Minister Wolfgang Schaeuble said last week he
thought the worst had passed for the debt crisis, although similar sentiments
have been expressed by various European policymakers and politicians since
Friday's European data followed news that China's services
sector saw its slowest rate of expansion in nearly a year and a half in
December, although the HSBC services PMI still pointed to a modest revival in
And economists expect the US ISM non-manufacturing survey,
another PMI, to fall slightly to 54.2 in December from November's 54.7. While
showing slowing growth, that would still signal a far brighter economic outlook
for the US compared with its European peers.
Analysts also predict the US economy added around 150 000
non-farm jobs in December, compared with 146 000 the previous month.