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The euro area private sector contracted further in January amid the Covid-19 pandemic as the decline in services was only partially offset by the growth in manufacturing sector, final survey results from IHS Markit showed on Wednesday.

The final composite output index dropped to 47.8 in January from 49.1 in the previous month but was above the flash score of 47.5.

A contraction of GDP looks likely in the first quarter, though on current trends this should be moderate in comparison to the falls seen in the first half of 2020, Chris Williamson, chief business economist at IHS Markit said.

The service sector was once again the main drag on the economy, with activity contracting for a fifth successive month. Meanwhile, manufacturing remained a bright spot, with production rising for a seventh successive month.

At 45.4, the services Purchasing Managers' Index was down from December's 46.4 but above the flash 45.0.

Of the largest euro area economies, only Germany recorded a rise in private sector output at the start of the year, although growth weakened to its lowest level for seven months.

All other nations recorded a contraction in activity. Solid falls were seen in France and Italy, while inclement weather in Spain exacerbated the effects of local restrictions designed to deal with the pandemic.

Due to slower service sector activity and a slowdown in manufacturing output growth, Germany's composite output index slipped to a seven-month low of 50.8, as initially estimated, from 52.0 in December.

The service sector contracted for the fourth straight month in January. The PMI fell to 46.7 from 47.0 in December. The preliminary reading was 46.8.

France's composite output index declined to 47.7 in January from 49.5 a month ago. The flash reading was 47.0. The decline in output was broad based and led by services firms.

The services PMI came in at 47.3, down from 49.1 in December. But score was above the flash 46.5.

Signaling a softer reduction in private sector output, Italy's composite PMI rose to 47.2 from 43.0 in December. The drop in services activity was partially offset by a quicker expansion in factory output.

Italy's services PMI climbed to 44.7 in January from 39.7 in December. The sector has contracted for the sixth straight month.

Spain's composite output index declined to a level of 43.2, from 48.7 in December and extending the current period of decline to six months. The manufacturing PMI decreased sharply to 41.7 from 48.0 a month ago.

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