Eurozone business activity falls sharply in November, survey shows (#1681248)

Euro zone business activity took a surprisingly sharp turn for the worse this month as the bloc's dominant services industry contracted and manufacturing sank deeper into recession, a survey showed on Friday.

The HCOB Eurozone Preliminary Composite Purchasing Managers' Index, compiled by S&P Global, sank to a 10-month low of 48.1 in November, below the 50 mark that separates growth from contraction.
A Reuters poll had forecast no change from 50.0 in October.

“The November PMI is another wake-up call for eurozone policymakers that the economy continues to show signs of weakness,” said Bert Colijn of ING.
“New business is weakening again for both manufacturing and services, with export orders in particular falling sharply as the eurozone economy struggles with weak demand from abroad.”

A composite index of new businesses fell to 46.6 from 47.9, its lowest reading this year, suggesting no improvement is imminent.
The weak data cemented expectations that the European Central Bank will cut interest rates again next month, lowering Bund yields and sending the euro to its lowest level against the dollar since December 2022.

The central bank has cut rates three times this year to 3.25% amid growing concerns about the bloc's lackluster growth prospects.

The economic recession accelerated in both Germany and France and business activity fell at the fastest pace since the beginning of this year, the survey showed.
Political uncertainty in the bloc's two largest economies may be partly to blame.
Germany's three-party coalition collapsed earlier this month, leaving the country in political limbo until snap elections in February, while in France a far-right party threatens to topple Prime Minister Michel Barnier's fragile coalition government for a dispute over the 2025 budget.

Widespread discomfort

Germany's economy grew less than previously estimated in the third quarter, the statistics office reported Friday, in more bad news for a country that will perform the worst among the Group of Seven rich democracies this year.

Adding to the gloomy outlook, German industry expects a 3% drop in output in 2024, a third year of decline, with no recovery in sight for 2025, the country's industry body BDI said on Friday.

For starters, President-elect Donald Trump's proposed trade tariffs will have a significant effect on the euro zone economy in the coming years, according to a large majority of economists in a Reuters poll.

A euro zone services PMI index, which had been offsetting the decline among manufacturers, fell to a 10-month low of 49.2 from 51.6. The survey's forecast was that there would be no changes.

Companies increased their workforce again, but were less optimistic about next year. The business expectations index fell to a two-year low of 55.0 from 59.9.

The manufacturing PMI index fell to 45.2 from 46.0, dashing expectations for no change.
An index measuring output, which feeds the composite PMI, fell to 45.1 from 45.8. This was despite factories reducing their rates for the third month and at a steeper pace than in October. The producer price index fell to 47.9 from 48.2.

In Britain, outside the European Union, business output contracted for the first time in more than a year and tax increases in the new government's first budget hit hiring and investment plans, its PMI showed, a new Setback for Prime Minister Keir Starmer's push for the economy. growth.
British retail sales fell much more than expected in October, according to official data on Friday, adding to signs of a loss of momentum in the economy.