Just released data by Markit on Eurozone economic activity continues to be a case of "half empty or half full?" as it continues to show a further deterioration in output, albeit with the rate of decline easing in January for the third straight month.

In fact, activity in both the Eurozone's manufacturing and service sectors declined at the slowest rates since last March, even though the data came in below the 50 mark that implies a contraction.

Thus, the combined final Eurozone composite output index moved up to 48.6, from the preliminary reading of 48.2 and December's level of 47.2.

More specifically, the services sector index also came in at 48.6 compared to 48.3 and 47.8, respectively.

The data continues to accentuate the idea of a European economy running at two speeds, or as Markit notes "the diverse picture among the four largest euro members with strong growth in Germany (where output grew at the fastest rate in just over a year and a half) contrasting with ongoing downturns in France, Italy and Spain."

Output in France registered the steepest drop, with the fastest monthly decline since March 2009 "causing the gap between the headline indices for France and Germany to increase to the widest in the survey history."

Markit chief economist Chris Williamson added that "the Eurozone is showing clear signs of healing", although he admits that the growth is "heavily skewed" towards Germany. French companies are noting the steepest downturn for nearly four years as output falls a much faster rate than in both Spain and Italy. Yet at the same time, German firms reported the strongest growth for almost a year and a half.

"More encouragingly, rates of loss of new business eased in France, Italy and Spain, accompanied by a return to growth in Germany, presenting a more consistent picture of demand moving in the right direction across the region," Williamson concluded.

JM

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