The eurozone private sector returned to growth at the start of the year after six consecutive months of contraction, raising hopes that the region might dodge a recession.

Flash survey results from S&P Global showed on Tuesday that the eurozone’s composite Purchasing Manager’s Index (PMI) jumped from 49.3 to a seven-month high of 50.2 in January, above the consensus of 49.8 and above the 50 mark that separates expansion from contraction.

While a mild contraction this winter remains possible, it looks increasingly likely that we may avoid a technical recession, defined as two consecutive quarters of negative real GDP growth. Chris Williamson, chief business economist at S&P Global Market Intelligence, said a steadying of the eurozone economy might suggest that the single currency zone might escape recession.

Meanwhile, in the US, a forward-looking measure of economic activity sank for the 10th month in a row in December with a widespread weakening outlook for manufacturing, home building and both job and financial markets.

The Conference Board Leading Economic Index (LEI) for world’s largest economy decreased by one per cent in December to 110.5, following a drop of 1.1 per cent in November. The LEI is now down 4.2 per cent over the six-month period between June and December 2022 – a much steeper rate of decline than its 1.9 percent contraction over the previous six-month period. Every time, since at least 1959, that the index has dropped more than one year-on-year, a recession has hit in the subsequent months, Jim Reid of Deutsche Bank warns.

Finally, in Germany, confidence among consumers is expected to improve in February for a fourth month in a row, as better expectations for the economy and personal finances drive sentiment, amid lower energy prices and receding recession concerns.

The German Gfk consumer confidence index rose to -33.9 heading into February from -37.8 this month and slightly shy of consensus of -33.2.

“With the fourth increase in a row, the positive trend in consumer sentiment is consolidating,” GfK’s consumer expert Rolf Buerkl said. “Even though the level is still very low, pessimism has eased recently.”

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