Euro zone manufacturing continues modest expansion last month

The euro zone manufacturing sector modestly expanded in the last month of 2018, as the euro zone's biggest economies recorded the lowest reading, a survey showed Wednesday.

The manufacturing purchasing managers' index (PMI), a key measure of manufacturing activity in euro zone countries, was 51.4 in December 2018, unchanged from the flash estimate, according to IHS Markit, a leading global provider of financial information services.

The survey showed that the latest PMI reading was the lowest seen since February 2016, down from November's 51.8. A reading above 50 indicates expansion, while a reading below 50 represents contraction.

Once again, the euro area's "big-four" economies posted the lowest manufacturing PMI readings of all countries monitored during December. Latest data showed that Italy remained in contraction territory and was also joined by France, where PMI data showed a first deterioration in operating conditions for 27 months.

Manufacturing growth in both Germany and Spain was modest, easing in each case to the weakest in around two-and-a-half years.

"A disappointing December rounds off a year in which a manufacturing boom faded away to near-stagnation," Chris Williamson, chief business economist at IHS Markit said.

"The weakness of the recent survey data in fact raises the possibility that the goods producing sector could even act as a drag on the overall economy in the fourth quarter, representing a marked contrast to the growth surge seen this time last year," Williamson said.