LONDON (Reuters – The eurozone’s economic recovery was hampered by a resurgence COVID-19 infected. A survey found that this weakened growth in its dominant service sector.

Omicron coronavirus was rapidly spreading at the end last year, and governments took measures to control infection rates in Germany, Europe’s biggest economy.

The Composite Purchasing Managers’ Index (PMI) of IHS Markit, which is a reliable indicator of economic health overall, fell to 53.3 in December, from 55.4 November. This was the lowest point since March.

The final reading fell below the 53.4 Flash estimate but it still exceeded the 50-mark that separated growth from contraction.

“The November accelerated growth in output turned out not to be a good sign. Joe Hayes (senior economist, IHS Markit) said that the Omicron variant’s spread had an especially profound effect on the services industry, reflecting renewed customer hesitancy.”

As the Euro area countries deal with the recent pandemic developments, it’s evident that economic risks are increasing as more restrictive restrictions on COVID-19 spread are in place.

The PMI for the services sector fell to 53.1 in eight months, compared with November’s 55.7.

Services firms have increased headcount at a slower pace than usual since May due to weaker demand, and further restrictions. From 55.4, the employment index dropped to 53.6.

On Monday’s factory PMI release, which indicated that manufacturing activity had remained strong in December suggests that supply chain bottlenecks have eased price pressures. [EUR/PMIM]

However, the composite input prices index held steady at 74.1. It was lower than November’s 76.0. However, the output prices index fell slightly but was still elevated.

There was little reason to be cheerful about inflation. Although there was a marginal easing of price pressures, we’re still in excessively hot territory – increases in both input and output costs were the second-quickest on record,” IHS Markit’s Hayes said.

The European Central Bank https://www.reuters.com/markets/rates-bonds/ecb-set-dial-back-stimulus-one-more-notch-2021-12-15 raised its inflation projections last month and now sees inflation at 3.2% this year, well above its 2.0% target.