Euro area private sector expanded at the fastest pace in four-and-a-half years in November, underpinned by continued improvement in services. Germany grew at the fastest pace in three months, while France experienced a slowdown in growth.
The composite output index rose to a 54-month high of 54.4 in November from 53.9 in October, flash survey data from Markit showed Monday. The reading was also above the expected score of 54.
The recovery continued to be driven by the service sector, where business activity and new business grew at the fastest pace since May 2011. Moreover, employment showed the biggest monthly gain for five years.
The services Purchasing Managers' Index, or PMI, increased to 54.6 from 54.1 in the previous month. The reading rose to a 54-month high, while it was forecast to fall to 54.
The manufacturing PMI climbed to 52.8 from 52.3 in the previous month. The reading reached a 19-month high. Economists had expected the score to fall marginally to 52.2.
Chris Williamson, chief economist at Markit, said "The data are signaling GDP growth of 0.4 percent in the closing quarter of the year, with 0.5 percent in sight if we get even just a modest uptick in December."
The Eurozone should be able to achieve pretty steady, if unspectacular growth over the coming months, barring a major downturn in global growth, IHS Global Insight economist Howard Archer, said.
Williamson said slightly improved PMI reading will no doubt do little to dissuade European Central Bank policymakers that more needs to be done at their December meeting to ensure stronger and more sustainable growth.
Jessica Hinds, a economist at Capital Economics, continues to expect a 10 basis point cut to the deposit rate and the monthly pace of asset purchases to be increased to at least EUR 80 billion at the December meeting.
Growth accelerated to a 3-month high in Germany, mirroring the biggest monthly improvement in business for two years. Meanwhile, one area of weakness was France, where business activity rose at the slowest rate for three months.
In Germany, a sharp upturn in services activity boosted private sector growth. Germany's composite output index rose to 54.9 in November from 54.2 in October.
The services PMI improved unexpectedly to 55.6 in November from 54.5 a month ago. The score was forecast to fall to 54.3.
Similarly, the PMI for manufacturing rose to 52.6 from 52.1 in October, while economists expected it to drop to 52.
Elsewhere, the French composite output index dropped to a 3-month low of 51.3 from 52.6 in October.
The PMI for services came in at 51.3, down from 52.7 in October. The reading was below the expected score of 52.2. Some service providers reported that the terrorist attacks in Paris had negatively impacted on activity.
Meanwhile, the manufacturing PMI rose to a 19-month high of 50.8 from 50.6 in the prior month. Economists had forecast the reading to remain unchanged in November.
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