The eurozone economy saw a solid end to 2015, with robust growth leading employers to take on extra staff at the fastest rate for just over four-anda-half years. Output prices meanwhile continued to fall. The Markit Eurozone PMI® dipped from 54.2 in November to 54.0 in December according to the preliminary ‘flash’ reading, but remained well above the 50.0 level.
The expansion seen in December was sufficient to complete the strongest quarter of growth recorded by the survey for four-and-a-half years. Manufacturing output rose at the fastest rate in 20 months, and outpaced the expansion in services activity for the first time in over a year. Services activity continued to rise solidly, albeit at the weakest pace since September.
Both sectors reported that further encouraging growth of new business led to ongoing job creation, pushing the overall rate of employment growth to the highest since May 2011. With the survey recording the largest increase in backlogs of work since May 2011, companies look likely to continue to raise staffing levels to meet demand in coming months.
Business confidence for the year ahead rose to a four-month high in the service sector, resulting Markit Eurozone PMI and GDP in a notably stronger hiring trend. Service sector employment showed the largest monthly gain since November 2010. Payroll growth was more subdued in manufacturing, and eased marginally since November.
Growth of factory headcounts has been stuck at a modest pace over much of the past year as producers have sought to cut costs and boost productivity. Input costs meanwhile rose to the greatest extent seen for four months, due largely to a combination of higher import costs arising from the depreciation of the euro and some evidence of increased wages. Prices charged fell slightly, however, with companies generally unable to pass higher costs on to customers due to intense competition.
