Service-sector inflation surged sharply in January across the 21-country Eurozone bloc, while businesses continued to face rising input costs, according to S&P Global’s flash Purchasing Managers Index (PMI) released on Friday. German companies also cut staffing levels for the first time in four months, marking a decline that was the largest since November 2009 when adjusted for the pandemic.
The headline composite PMI for January stood at 51.5, unchanged from the previous month and in line with forecasts. Manufacturing activity remained in contraction at 49.4, with input costs rising at the sharpest pace in three years while output prices fell—indicating companies could not pass on increased expenses to buyers.
The services sector PMI dipped to a four-month low of 51.9, but analysts highlighted a significant acceleration in output prices—a gain not seen for 11 months. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, described the overall economic recovery as “rather feeble” and warned that the results were “anything but reassuring” for the European Central Bank.
German job losses have been particularly acute in recent years, especially within manufacturing, where structural energy costs and competitive pressures have strained industrial operations. While employment continued to rise across most of the Eurozone, the decline in German staffing levels has raised concerns about regional economic resilience.