November saw a ‘solid’ expansion of business activity in the eurozone, according to the latest HCOB Flash Eurozone Composite PMI Output Index.
The composite index stood at 52.4 for the month, down marginally from 52.5 in October, and while this is a two-month low for the index, business output in the eurozone has increased for each of the past 11 months.
Business activity
Expansion in business activity was centred on the services sector, where activity grew at the fastest pace for a year and a half, while manufacturing production was up slightly.
Europe‘s biggest economy, Germany, saw growth in output, albeit at a slower pace than the previous month, while in France, business activity hit near stabilisation, boosted by a return to growth in the services sector.
Outside of these markets, output rose solidly, and at the fastest pace since April 2023, the data showed.
In terms of future outlook, business sentiment in the eurozone rose in November, and was above the average for the year, with data also indicating that output is set to increase over the next 12 months.
Optimism among manufacturers was at a five-month high, while service providers recorded a slight decline.
‘No-man’s land’
“For months the manufacturing sector of the eurozone has been marooned in a no-man’s land of directionlessness,” commented Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “Production has picked up slightly since March of this year, but the overall situation has not improved during this period.
“Companies continue to face weak demand, which is reflected in a slight decline in new orders. In this environment, companies have reduced their inventories of both intermediate goods and finished goods even more sharply than in the previous month, meaning that the inventory cycle continues to show no signs of turning upward. We are still several months, and possibly even several quarters, away from sustained expansion in the manufacturing sector.”
‘Growth in the short run’
Elsewhere, Bert Colijn, chief economist with ING in the Netherlands, said that the data indicates that “growth in the short run remains decent despite significant global headwinds”.
As he noted, “With consumer intentions to save at an all-time high, a strong euro, and many trade war effects still working their way through the economy, overly optimistic growth expectations should be tempered in the months ahead.” Read more here and here.
