Eurozone consumer sentiment reached its highest level in January since the start of last year. Final prices were raised in the services sector, while goods prices continued to fall moderately. Growth in the Chinese economy slowed in the fourth quarter to 4.5% year on year from 4.8% in the third quarter, the weakest result in the past three years. Meanwhile, US household incomes continued to grow steadily and in November were just under 4% higher than a year earlier, although purchasing power has not improved over the past four months.
Eurozone business sentiment has remained stable and positive at the start of the year. According to the initial estimate, the composite Purchasing Managers' Index (PMI) stayed at 51.5 points in January, although sentiment moved in different directions across sectors. In the services sector, business optimism eased at the start of the year, with the PMI slipping to 51.9 points, the lowest level in the past four months. Improvements in Germany's services sector contrasted with a sharp deterioration in France at the start of the year.
In manufacturing, by contrast, business sentiment improved, even though the eurozone manufacturing PMI remained in pessimistic territory (49.4 points). Eurozone businesses continued to report rising costs at the start of the year, particularly in the manufacturing sector.
Growth in China slower than forecast
For 2025 as a whole, China's GDP growth met the government's 5% target, yet the Chinese economy continued to operate at two speeds at the end of the year as well. Retail growth slowed in December to 0.9% year on year from 1.3% in November, while manufacturing growth accelerated to 5.2% from 4.8–4.9% over the previous two months, partly thanks to resilient external demand. Growth in the industrial sector was driven mainly by the manufacture of computers and communications equipment, where output rose by 11.8% year on year.
Lending activity in China remained weak – loan portfolio growth stayed at a record low of 6.4% in December, and household lending volumes have also begun to shrink of late. The decline in investment deepened further at the end of the year across all the main segments, and conditions in the property sector likewise remained markedly weak, with both housing demand and house prices continuing to fall.
US consumers spend more and save less
In November, US household spending rose by 0.3% in real terms, the sixth consecutive increase. After stagnating in the first five months of the year, consumer demand picked up and in November was 2.5% higher than a year earlier. Overall, consumption growth this year was driven largely by demand for services and non-durable goods, while spending on durable goods was down over the first 11 months of this year (growth of 1.1% year on year). Households continued to devote an ever larger share of their income to spending – in November savings amounted to 3.5% of disposable income, compared with an average of 5% in the first half of the year.
About CBL Asset Management
IPAS CBL Asset Management, a subsidiary of Citadele bank, is one of the leading and most experienced financial asset management companies in the Baltic states, employing globally recognised investment fund managers. It has been managing investment portfolios since 2002. In 2003 it became one of the first companies in Latvia to begin managing second-pillar pension savings. CBL Asset Management has the largest team of managers in Latvia, which, drawing on its managers' experience and modern technology, regularly analyses the financial and capital markets and macroeconomic trends, and invests pension savings both in major international and local Latvian companies and in bonds from a range of countries.