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Trade activity in the euro area has slowed after restrictions to tackle the surge in coronavirus infections hit the service sector, as there were signs of easing the bottlenecks of the supply curbing manufacturers, a survey showed.

The IHS Markit Eurozone Purchasing Managers’ Flash Composite Index, a monthly survey that takes the pulse of business activity, fell slightly more than most economists expected a low of nine months to 53.4, compared to 55.4 the previous month.

A number of countries have recently announced tougher coronavirus measures, including Germany, Italy, Austria and the Netherlands. The restrictions reduce the flow of customers into the service sector, especially restaurants and shops.

While the PMI score for the services sector remained above 50, indicating that a majority of companies report higher activity levels than a month ago, the slowdown in services growth has been more marked only for manufacture, according to IHS.

Companies have reported improving global supply chain problems that have caused backlogs at factories, congestion at ports and shortages of materials, helping manufacturers report the biggest increase in production since September.

Input costs and selling prices rose less sharply than the previous month, but IHS Markit said they were still increasing at the second fastest rate in the history of its survey. Rising shipping costs, energy prices and personnel costs have further increased inflationary pressures, he said.

“The eurozone economy is taking another hard hit from Covid-19, with rising infection levels slowing growth in the service sector in particular, leading to a disappointing end to 2021,” said Chris Williamson, Chief Economist at IHS Markit.

But he added that there was “encouragement” from easing supply pressures in the manufacturing sector, for which the survey’s output measure hit a three-month high.

German companies reported a slowdown in activity and their first drop in new orders for goods and services since June 2020, as the country’s PMI score fell to its lowest level in 18 months, at 50.

The services sector PMI index fell below 50 for the first time in eight months, indicating that a majority of companies in the sector reported lower activity from a month ago, offsetting a resumption of manufacturing production.

The situation was more favorable in France, where companies reported a slight slowdown in growth and IHS Markit said that “a relatively resilient service sector helped offset a decline in manufacturing output for the second time in recent years. last three months ”.

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