The Eurozone economy is slightly moving away from stagnation at the end of 2019 against the backdrop of an improving service sector and despite a new shrinkage in the industrial sector.

The IHS Markit PMI index for the Eurozone rose to 50.9 points in December from 50.6 points reported in November. Thus, the indicator remains above the 50-point line that separates expansion from contraction. Although this is the highest level of the index in the last four months, it still signals that the economy has been growing at the slowest pace in the last six years as production continues to shrink. According to IHS Markit estimates, the region’s GDP has grown by about 0.1% in the last quarter.

In France, the PMI index reached 52 points in December, while the PMI index for the services sector reached 52.4 points.

In Italy, there are still signs of contraction, as the PMI’s total index remains below the 50-point line at 49.3 points. This is despite the PMI index for the services sector is improving to 51.4 points.

The good news comes from Germany, whose economy has returned to growth after three months of contraction. PMI’s index in Europe’s largest economy reached 50.2 points in December, aided by continued expansion in the country’s services sector. In November the total index reported a level of only 49.4 points. The PMI level for services in Germany rose to 52.9 points in December from the 52 points reported in November.

Although not part of the Eurozone, the UK will play a key role in the future development of the region. The UK PMI index rose from 48.5 points to 49.3 points in December, but still remains below the 50 point line. It is on this line that the PMI Index of Services in the British Economy is set in December.

The Eurozone is increasingly relying on the cost of services to support its expansion, offsetting the decline in production, which is partly due to the US-China trade war with Brexit. The main risk at the moment is that the loss of jobs in factories will undermine the economy as a whole.

“In the absence of significant adverse developments, we expect growth to begin to improve as 2020 progresses, with low inflation and easing of financial conditions supporting consumer spending in particular”, said Chris Williamson, chief business economist at IHS Markit. “However, the risks of declining growth next year remain significant”, added he.

Exports and the labor market situation can be considered as such challenges. Eurozone exports declined for the 15th consecutive month. The number of new jobs has been growing at the slowest pace in the last five years.