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Eurozone growth slows as Omicron measures hit spending

BRUSSELS (AFP) – Economic growth in the eurozone slowed sharply in January, a key survey showed yesterday, as new coronavirus restrictions hit consumer spending, raising a new obstacle for the region’s recovery.

In its closely watched monthly survey, IHS Markit said the deceleration, which brought growth to an 11-month low, was completely attributable to the services sector, with manufacturers enjoying a reprieve from supply challenges and seeing a boost in activity.

IHS Markit said that the sky-high caseloads for the highly contagious Omicron variant had disrupted consumer-facing services through staff absences and continued social distancing.

The purchasing managers’ index (PMI) from IHS Markit dropped to 52.4 in January, after posting 53.3 points in December and hitting a high 59 points in August. A figure above 50 indicates growth.

Tourism, travel and recreation were “especially hard hit”, said Chief Business Economist at IHS Markit Chris Williamson.

However, he added that the impact on other parts of the economy was “relatively muted” and that the overall fallout from Omicron “so far looks less severe than prior waves”.

The overall trend masked different situations in different countries.

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