Eurozone’s PMI to recover in 2016

Eurozone's January composite PMI declined from 54.3 to 53.5, falling to its lowest level since last February. The fall was larger than expected and it is likely to deteriorate further suggesting a slow growth in the economy. The quarterly GDP growth is about 0.3%-0.4% in line with third quarter's growth of 0.3%. The PMI index declined due to weakness in manufacturing output, export orders index and service index. The decline in service index implied slowdown in overseas growth.

France PMI index rose from 50.1 to 50.5, drifting away from the 50 mark, but was below the Q4 average of 51.2. In contrast, German index dropped from 55.5 to 54.5, hitting its lowest level in three months; however, it posted a quarterly GDP growth of over 0.5%.

The recovery in eurozone's economy is likely to be slow. As the push received from falling oil prices and depreciating euro loses momentum, the economy is seen struggling to generate the much needed inflationary pressure, thereby keeping the ECB under pressure to follow up on its recent hints with action in March.