Eurozone manufacturing PMI touched an 8-month high in December while composite output index fell, according to a survey.
Manufacturing PMI in the eurozone rose at a slower-than-expected pace in December to touch 56.8, up from 55.3 in November.
The Markit Flash Eurozone Composite Output Index fell to 55.0 in December, from 55.5 in November, indicating that the average rate of growth in the fourth quarter is the weakest since the first.
The fourth quarter has also been the weakest quarter of the new business growth seen so far this year, indicating that business activity might be slowing down in the eurozone.
The purchasing managers' services and manufacturing surveys suggest that Eurozone GDP growth in the fourth quarter is likely to be similar to the 0.4% quarter-on-quarter rate achieved in the third quarter, Howard Archer, an economist at Global Economics, said.
However, this masks the widening divergences in the growth performances of individual countries, with Germany storming ahead and the southern periphery countries lagging badly, he added.
Germany's Manufacturing PMI rose in December to 60.9, from 58.1 in November, touching a 5-month high. The composite output index also touched a four and half year high at 59.7 in December.
In contrast to the rest of the eurozone, the level of new business received by German private sector companies also rose at a robust pace in December, with the rate of expansion accelerating to its fastest since August 2007, the report said.
Manufacturers pointed to stronger demand from export clients in December, as highlighted by the sharpest increase in new work from abroad for six months, the survey report added.
Manufacturers in the eurozone also appear to be preparing for further output growth in coming months, with stocks of purchases showing only the second monthly rise seen over the past four years, as input buying rose at the fastest rate for eight months, the report said.
As employment grew during the month, input price inflation also rose, touching its highest level since August 2008. Output prices rose at its fastest level since September 2008.
The ECB is very well aware of the headwinds facing the Eurozone economy, so it still looks highly likely to keep interest rates down at 1.00 percent for some considerable time to come. In fact, we do not expect the ECB to raise interest rates until the fourth quarter of 2011 at the earliest, Archer said.