Euro area’s service sector output expands in January, PMI unchanged at 53.7

Euro area’s service sector output expands for the 42nd consecutive month in January. The Markit Eurozone PMI Services Business Activity Index remained the same at 53.7 in January from December’s print. It came in slightly above the flash estimate of 53.6. Strong output growths were witnessed throughout the ‘big-four’ nations and Ireland.

The sharpest rise in business activity was seen in Ireland, where growth reached seven-month high. Spain stayed in second place in spite of seeing its pace of growth decelerate to a six-month low, followed by a rebound in the pace of growth in France.

The pace of rise in France was the most rapid since August 2011, supported by the most rapid inflows of new work in more than one-and-a-half years. Growth slowed in Germany to a four-month low, reflecting a similar slowdown in new business. Italy’s business activity accelerated at a slightly more rapid rate than at the end of last year, in spite of a slight slowdown in the pace of growth in new orders.

Euro area’s service providers’ business sentiment in January stayed close to December’s 11-month high. Optimism rebounded in Spain and Germany; however, it dropped in Italy, France and Ireland. Increased sentiment, along with the continuing upturn in the sector resulted in additional job creation. Euroarea services employment was up for twenty seventh successive month in January, with the pace of growth increasing to a six-month high. Staffing levels were up in each of the five nations included in the survey, led by Germany and Ireland.

Input cost inflation rose in January, taking the pace of rise to its most rapid since March 2012. Improved pricing power combined with a desire to pass rising costs onto clients resulted in a further rise in average output charges. Selling prices were up for the third straight month, although to a slightly lesser degree than in the earlier survey month, noted Markit.