LONDON, (Reuters) – Euro zone business growth was slower than anticipated this month because of renewed restrictions imposed to curtail Omicron coronavirus variation. The survey revealed that the restriction on Thursday impeded the recovery in the dominant services sector.

Europe is currently facing a fourth wave infection and most governments are encouraging their citizens to avoid social contact and stay at home.

Flash Composite Purchasing managers’ index by IHS Markit, a great indicator of overall economic well-being, declined to 53.4 from 55.4 in November. It is now at its lowest level since March.

This headline figure was affected by the services PMI which fell to an 8-month low at 53.3, from 55.9. It was above the 50 mark that separates growth and contraction, but it did not meet the Reuters poll forecast for 54.1.

Chris Williamson (chief business economist, IHS Markit) stated that the euro area economy has suffered yet another setback from COVID-19. Rising infection rates are limiting growth in certain sectors, which will lead to a disappointing finish to 2021.

The growth in services demand fell to its lowest level since April, when it contracted. With the new business index dropping to 52.6 (from 54.2), this indicates that there was a decline in service demand.

The coronavirus restriction was less severe for factories, so the PMI manufacturing fell to 58.0, a drop of 10% from November’s peak of 58.4. A composite PMI indicator that measures output grew to 53.9, from 53.8.

One bright spot for European Central Bank policymakers, who met later Thursday, was that price pressures have abated, but remained high. While the index of input prices fell to 87.0 from an initial 88.9 level, it saw an even greater drop in output prices.

Williamson stated that “easing supply constraint have relieved some of inflation’s upward pressures.”

The ECB is set to halve the amount of assets it buys each month from April, according to a Reuters poll https://www.reuters.com/article/eurozone-economy-poll/ecb-to-halve-bond-purchases-from-april-say-economists-idUSKBN2IS00V of economists, although interest rate increases are likely years away.

Nevertheless, the optimism for the future improved as vaccine rollout is continuing apace. Composite future output index improved to 66.5, from 66.1.