Fears over eurozone growth were sparked today as disappointing data revealed borrowing costs had tumbled to its lowest point in more than four years. The ‘flash’ eurozone purchasing managers’ index of business activity in the bloc, fell to to 51.3 in December, its weakest since November 2014. That was down from a final November reading of 52.7. Recent protests in France have had a negative impact on the economy as the nation recorded its first contraction in private sector business activity for the first time in more than two years.
While in Germany, private sector activity weakened to a four-year low as Bundesbank predicted the economy to slow in the coming years.
The release of the data sparked a plunge in euro which crashed through the $1.13-mark against the US dollar to $1.1288.
According to Bloomberg at 11:30 GMT, the euro had claimbed back up slightly and was worth $1.1302.
Against the pound, the euro fell to 0.8962 pence before rising again to 0.8982 pence.
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Alexander Aldinger, rates strategist at Bayerische Landesbank, said: “The growth concerns are back – the French PMIs were effected by the demonstrations but all across the euro zone the PMIs were weaker than expected.
“The market’s reading is that the ECB will not be able to hike rates next year if the outlook deteriorates further – especially with China-US trade tensions and Brexit worries in the background.”
The release of the data comes just one day after the European Central Bank (ECB) ended its massive asset-buying scheme.
The €2.6trillion (£2.3million), four-year-long bond buying programme has seen the ECB top up eurozone cash supply by purchasing millions of euros worth of assets each month.
The amount of assets bought each month was reduced in September to €15billion from €30billion as the scheme began to wind down.
The ECB said it will reinvest funds from maturing bonds accumulated under the scheme for some time.
ECB President Mario Draghi slashed growth forecasts for the bloc following the announcement, while also leaving interest rates on hold.
Euro area growth for 2018 was downgraded to 1.9 percent from the 2.0 percent forecast back in September.
For 2019, Mr Draghi said growth in the euro area was slashed from 1.7 percent compared to 1.8 percent previously forecast.