- Chris Williamson, chief economist at survey compiler Markit
Businesses in the Euro zone began the year on a firmer footing than first estimated. Markit's final composite PMI rose to 53.6 in January, compared with the flash reading of 53.5 but weaker than December's 54.3. The final gauge measuring business activity in the services sector was in line with the flash estimate at 53.6, but down from 54.2 recorded in December. Nevertheless, the headline index has remained above the important 50 mark for 31 straight months. The data is consistent with economic growth of 0.4% in the first quarter of 2016, despite the financial markets rout and concerns about the economy of China. Yet, the composite report continued to point to divergences in the 19-nation economy, with Spain and Germany driving growth. France surprised to the downside, with the index at just 50.2, while growth in Italy also slowed. Furthermore, the Euro area's manufacturing and services sectors cut prices at the fastest pace in almost a year in January, intensifying concerns about weak inflation in the region.
A separate report showed retail sales in the Euro bloc increased for the first time in four months in December. Sales at European retailers climbed by an expected 0.3% in the reported month from November, and by 1.4% from December 2014. The data indicated that the boost to households' disposable income from lower oil prices continued to support their spending, a key driver of the recovery over the past year.
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