According to the final report from S&P Global, activity in the eurozone private sector expanded in early 2023 after contracting for the previous six months.
The Eurozone Composite PMI Output Index rose to 50.3 points in January from 49.3 points in December. The index recorded the third monthly increase in a row and rose above the 50-point mark, indicating an expansion of activity in the sector for the first time since June 2022.
Sector-level data showed that the renewed expansion was driven solely by service companies. Activity in the manufacturing sector continued to decline at the beginning of the year, although the pace of contraction was the slowest since June 2022. On the other hand, activity in the service sector expanded for the first time since last summer.
S&P Global said that demand remained weak in January - the total number of new orders fell for the seventh month in a row. However, new business intakes fell only modestly. Private sector companies also reported a difficult situation in the export market, as the number of new foreign orders decreased. However, the decline was the slowest since June 2022. Meanwhile, volumes of incomplete work declined for the seventh month in a row. Nevertheless, despite data indicating that the level of capacity is sufficient to meet existing demand, the level of employment in the private sector increased in January. The pace of job creation even increased to a three-month peak and remained above its historical average.
The data also showed that private sector companies were more optimistic about the prospects for the next 12 months. The level of positive sentiment improved to a nine-month high, but remained much lower than in February 2022, before Russia invaded Ukraine.