Euro Zone Business Experiences Modest Growth Amid Manufacturing Recovery

The euro zone's economy started the year with slight growth as shown by a survey. The services sector remained stable in January, while the manufacturing downturn eased. The composite Purchasing Managers' Index rose to 50.2. Despite growth, demand is weak, and job cuts continue.

The euro zone economy entered the new year on a note of cautious optimism, with a survey indicating modest growth driven by a stable services sector and a softening downturn in manufacturing.

The preliminary composite euro zone Purchasing Managers' Index, from S&P Global, climbed to 50.2 in January, surpassing December’s 49.6 and just surpassing the crucial 50-point threshold that distinguishes growth from contraction. This came as a surprise, as a Reuters poll had anticipated a smaller increase to 49.7.

Despite the encouraging signs, demand growth remains lackluster. Businesses are not expecting a significant rebound, as reflected in staffing cuts. The composite employment index rose to 49.8, a tad below the breakeven mark.

(With inputs from agencies.)