Euro zone recovery weakens further amid Omicron curbs

The euro zone economic recovery weakened further this month as renewed restrictions imposed to contain the Omicron coronavirus variant put another dent in bloc's dominant services activity and as prices continued to soar, a survey showed on Monday.

With the variant sweeping across Europe governments have been encouraging citizens to stay home and avoid socialising or meeting in groups.

IHS Markit's Flash Composite Purchasing Managers' Index, seen as gauge of overall economic health, dropped to 52.4 in January from 53.3 in December, its lowest since February and below the 52.6 predicted in a Reuters poll.

That headline number was affected by the services PMI, which dropped to a nine-month low of 51.2 from 53.1. Although above the 50-mark separating growth from contraction it was well below the Reuters poll estimate for 52.2.

"The Omicron wave has led to yet another steep drop in spending on many consumer-facing services at the start of the year, with tourism, travel and recreation especially hard hit," said Chris Williamson, chief business economist at IHS Markit.

With customers staying home, growth in demand for services almost dried up. The new business index sank to 50.8 from 52.5, its lowest reading since April last year just before parts of the economy reopened after a stricter lockdown.

Consumers were also hit by rocketing prices. The composite output prices index matched November's survey high, and comes after inflation hit a record last month, likely adding pressuring on the European Central Bank to tighten policy.