FXStreet (Delhi) – Bert Colijn, Research Analyst at ING, notes that the Eurozone economy has started the year on a disappointing note, as the Eurozone PMI fell from 54.3 to 53.5 in January. Key Quotes “This shows that the slowdown in emerging markets and financial market turmoil is affecting the economy somewhat, but not enough to significantly slow down growth yet. Especially encouraging are the labour market improvements that businesses indicate, which hints at more domestic demand driven growth in the months ahead as external factors remain uncertain. Indeed, businesses were upbeat about the future as especially firms in the service sector expect a strong rise in future activity levels. This shows that while consumers and the ECB are spooked by the current turmoil in markets, European businesses remain upbeat about the months ahead. The survey also indicated that businesses have continued to cut prices in January, indicating that the lower energy prices are being passed onto the consumer. This means that the inflation outlook remains very subdued for the moment. After yesterday’s dovish remarks by ECB president Mario Draghi, this will add pressure on the ECB to act in March. The German PMI decreased amidst the global unrest and financial market turmoil, but still signals relatively strong output growth. Manufacturing increased at the slowest pace in 8 months, hindered by the sluggish energy industry. New orders from abroad also increased this month, but the growth rate slowed as the global slowdown weighs somewhat on German exports. Services performed more strongly and the outlook for services in the Eurozone’s largest economy improved to an almost 5-year high. France saw somewhat stronger growth in January, albeit very subdued. Surely, this does not signal a strong start to the year, but to call this an “economic state of emergency” like president Hollande did earlier this week seems a stretch, especially as the PMI indicates that employment is on the rise for the first time since June. Just like in Germany, the French service sector performs stronger than manufacturing. This indicates that economic growth is still mostly driven by domestic demand.” For more information, read our latest forex news.