Services and manufacturing combined:
Market conditions remained subdued at the end of2012, with the level of
incoming new business
contracting for the seventeenth straight month.Declines were reported by both manufacturers andservice providers.Ireland was the only nation to report an increase innew orders, although rates of reduction did ease inGermany and Spain. In a worrying development,the rate of decline in France and Italy bothaccelerated, to the sharpest since March 2009 andJuly 2012 respectively, which may put furtherpressure on the trend in headline activity in comingmonths.Weak demand continued to result in available sparecapacity in the Eurozone private sector, reflected ina further marked decrease in
backlogs of work
.However, the rate of depletion in outstandingbusiness eased to its slowest since August.Further
were implemented duringDecember, with both manufacturers and serviceproviders reporting further cuts to payroll numbers.In contrast to the broader trend, Ireland continuedto report solid job creation in December. Therewere also signs of the German labour marketstabilising, as a modest increase in service sectorpayrolls offset further jobs cuts at manufacturers.Employment fell again in France, Italy and Spain,with rates of loss broadly similar to November.Inflationary pressures remained muted overall atthe end of 2012, mainly due to companies needingto remain price competitive in the face of lacklustredemand.
fell for the ninth monthrunning in December. Price discounting was seenin the service sector, whereas factory gate priceswere unchanged. However, the combined rate ofdecline in output prices over Q4 2012 as a wholewas less marked than in the prior quarter.Average
rose at a slightly sharper pacein December, with rates of increase edging higherin each of the big-four economies. Input prices rosein both the Eurozone manufacturing and servicesectors, with the steeper inflation signalled byservice providers.
The Eurozone service sector contracted for theeleventh consecutive month in December, as levelsof incoming new business continued to decline.At a five-month high of 47.8, up from 46.7 inNovember, the Markit
Eurozone ServicesBusiness Activity Index
was unchanged from theearlier flash estimate and consistent with a solidreduction in output.The weakness was centred on France, Italy andSpain – all of which reported lower levels of output – although rates of decline did ease in the lattertwo. In contrast, business activity rose in Germanyfor the first time since July, while growth wasrecorded in Ireland for the fifth successive month.The level of incoming
contracted forthe sixteenth successive month in December. Therate of decline in new order inflows was still abovethe average for this sequence, despite easing to asix-month low in the latest survey period. Newbusiness declined in France, Italy and Spain, rosestrongly in Ireland and edged back into growthterritory in Germany.Spare capacity remained available in the sectorduring December, as
backlogs of work
have also been reported ineach month of 2012, with December seeing furthercuts implemented in France, Italy and Spain.Germany saw a modest increase in employment forthe second time in the past three months (meaningpayroll numbers stabilised over Q4 2012 as awhole) and there was solid job creation in Ireland.
Input price inflation
accelerated to a nine-monthhigh in December, reflecting higher costs forenergy, staffing and transportation. In contrast,average
declined at the fastestpace in three months. Germany was again the onlynation to report an increase in selling prices.
regarding output levels in one year’stime remained subdued at the end of 2012, despiterising to a four-month high in December. Thedegree of positive sentiment improved in Franceand Spain, while optimism declined over the monthin Italy and Ireland. German service providersreported a neutral outlook for the year ahead.
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