Eurozone productivity falls for 1st time since last March: IHS Markit

The January data pointed to efficiency losses in the eurozone private sector, as output growth was restricted by lingering problems in supply chains and the new wave of COVID-19, IHS Markit said in a press release.

Goods producers signalled the sharpest deterioration in over one-and-a-half years, while service providers recorded the slowest gain in the current nine-month sequence of growth.

At 49.6 in January, down from 50.1 in December, the seasonally adjusted eurozone productivity purchasing managers’ index (PMI)—compiled from IHS Markit’s national manufacturing and services PMI survey data—was in contraction territory for the first time in ten months.

The latest reading was, however, indicative of a marginal rate of reduction overall. The downward movement in the headline figure reflected a faster decline in productivity among manufacturers and a slowdown in growth among services firms.

Eurozone manufacturers recorded a fourth consecutive monthly deterioration in workforce efficiency at the start of the year. Despite being moderate, the rate of reduction quickened to the fastest since mid-2020.

Productivity rose in the service economy, but the pace of growth was fractional and eased to the slowest in the current nine-month sequence of expansion. The worst trend for private sector productivity was recorded in Germany.

The rate of contraction eased to the weakest in four months and was slight overall. PMI data for January indicated that a marked and accelerated upturn in jobs underpinned a renewed expansion in output.

German manufactures saw efficiency losses for a fourth successive month. The rate of contraction was marked and broadly similar to that seen in December.

Productivity rose in the service sector, ending a five-month sequence of reduction. The pace of growth was, however, fractional. After registering efficiency gains for two months in a row, private sector companies in France signalled a reduction in January. The overall rate of contraction was marginal.

ALCHEMPro News Desk (DS)