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Eurozone Private Sector Returns To Contraction In November

eurozonepmi nov23 03dec20 lt

The euro area private sector economy returned to the contraction zone in November due to a sharp fall in services activity amid the new restrictions to combat the second wave of coronavirus infections, final data from IHS Markit showed on Thursday.

The final composite output index fell to 45.3 in November from 50.0 in October. The flash reading was 45.1.

The decline was driven by the downturn in service sector activity which fell to the greatest degree since May. In contrast, manufacturing output growth was sustained for the fifth month in a row.

The services Purchasing Managers' Index decreased to 41.7 from 46.9 a month ago. According to flash survey, the score was 41.3.

"The fourth quarter will nevertheless likely see the eurozone economy take another major step backwards, with especially steep downturns suffered in France, Spain and Italy," Chris Williamson, chief business economist at IHS Markit said.

Encouragingly, growth expectations have lifted higher, as vaccine developments fuel optimism that life can start to return to normal in 2021, Williamson added.

Germany was the only nation to record an increase in overall private sector output in November.

All other nations covered by the survey registered a decline in activity. France, Italy and Spain all reported sharp contractions that were each the greatest recorded since the severe declines seen in May.

Although the German private sector continued to expand, the final composite output index fell to a five-month low of 51.7 in November from 55.0 in the previous month. The flash score was 52.0.

The services business activity index moved further below the 50.0 no-change threshold to 46.0 from 49.5 in October and was below the initial score of 46.2.

France's private sector reported the quickest contraction in six months as activity faced a second round of lockdown restrictions.

The composite output index declined further to 40.6 from 47.5 but stayed moderately above the flash 39.9. The services PMI came in at 38.8 versus 46.5 in the previous month. But this was above the initial estimate of 38.0.

Italy's private sector reported the fastest reduction in output since May. Services firms logged a marked drop of activity which outweighed a mild uptick in factory production.

The composite output index fell to 42.7 from 49.2 in October. At 39.4, the services PMI was at a 6-month low and down from 46.7 in October. The reading was forecast to fall to 41.3.

Driven by a severe contraction in services and a marginal fall in manufacturing output, Spain's private sector contracted the most since May. The composite output index dropped to 41.7 from 44.1 in the previous month.

The services PMI declined less-than-expected to 39.5 from 41.4 in the previous month. The expected reading was 36.6.

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