A service sector slump in January plunged business activity in the nations sharing the euro to the lowest level in over three years, a widely watched survey showed Feb. 5. An NTC Research survey of business leaders fell to 51.8 points in January from 53.3 points in December for the lowest reading since November 2004.The result fell short an an initial estimate of 52.7 points but was still above the 50-point level that indicates expansion.
However, the index of service sector activity fell even more sharply, catching economists off guard and raising fears that growing headwinds facing the 15-nation eurozone economy were taking their toll. The service sector index fell to a four-and-a-half-year low of 50.6 points in January, down from a first estimate of 52.0 points and a reading of 53.1 points in December.
"The substantial downward revision in the January eurozone service sector business activity index is an absolute shocker," economist Howard Archer said at consultants Global Insight. He said it "highlights the increasing pressure that the eurozone economy is coming under from the credit crunch and financial market turbulence, the strong euro, elevated oil and commodity prices, higher interest rates and softer growth in key export markets."
Copyright Agence France-Presse, 2008