Business activity in the eurozone declined further in December, though less sharply than the previous month thanks to an upturn in the services sector, a closely-watched survey showed Monday.

The HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global stood at 49.5 compared to 48.3 in November, as companies in the single-currency area continued to struggle to secure new orders.

Any reading below 50 shows contraction, while a figure above 50 indicates growth.

The slump was tied to a "deepening downturn" in manufacturing production, which saw its 21st consecutive monthly fall in output -- "the most marked for a year," S&P Global said in a statement.

The reduced output in manufacturing outweighed a "modest return to growth" in the much larger service sector, a survey said

The reduced output in manufacturing outweighed a "modest return to growth" in the much larger service sector, the survey said.

Germany and France, the 20-country eurozone's two biggest economies, were once again driving the weakness.

Business activity in both remained in contraction during December -- in contrast with the rest of the single currency area where it rose to a six-month high, S&P Global said.

"The end of the year is somewhat more conciliatory than was generally expected," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"While manufacturing is still deep in recession, the rebound in services output is a welcome boost for the overall economy."

De la Rubia noted that Germany and France remained "in politically uncertain waters" -- one headed for early elections, and the other battling a period of political instability following snap polls earlier this year.

"This is preventing the necessary reforms from being implemented in the short term to boost growth again and is contributing to the ongoing weakness in both countries," he said.

However, de la Rubia also saw "upside risks" linked to the current situation in the eurozone's heavyweights.

"If future governments manage to chart a clear course, there could still be positive surprises next year," he said.

"Eurozone companies were actually slightly more confident than in November that business activity will be higher a year from now than it is today."