- Previously 51.4
- Manufacturing PMI 45.9 vs. expected 45.3
- 45.0 and earlier
- Composite PMI 49.7 vs. expected 49.8
- Previously 49.6
Manufacturing in the region continues to be in contractionary territory, while service activity continues to slow further into the fourth quarter. After all, the eurozone economy faced stagnation in October, reaffirming that it is stuck in a rut. In detail, while new orders have decreased for the fifth consecutive month, the demand environment remains weak.
In addition, business confidence has slumped, and the employment situation has declined for three consecutive months. Turning to price pressures, inflation appears to be at least slightly declining overall, but there are mixed signals. Service input prices rose significantly during the month, but at least at a slower pace than the series average.
HCOB points out:
“The euro area is stuck in a bit of a rut, with the economy contracting slightly for the second month in a row. Manufacturing remains weak, largely offset by a slight rise in the services sector. It is noteworthy that the situation in France has worsened, while the decline in Germany has eased slightly.For now, it is not clear whether we will see further deterioration or improvement in the near future.
“The euro area services sector continues to grow, but its growth is modest and is helping to bring the overall economy closer to stability. However, we should not get too excited about the near future. Businesses are receiving fewer new orders and backlogs have fallen for the sixth month in a row.For the first time since the start of 2021, employment in the service sector has come to a near standstill.The real issue is rising wages and falling inflation. The question is whether the combination of these will revive consumer spending and provide much-needed stimulus to service providers.
“The latest figures come as an unwelcome surprise for the European Central Bank (ECB). Inflation in the services sector is likely to remain high, as costs and selling prices rose more rapidly in October than in the previous month. , due to persistent wage pressures, which have had a particularly big impact on service providers. All this comes as the ECB announced in December that the key interest rate would be just 25 basis points, rather than the 50 basis points as some have suggested. This supports the idea that a basis point reduction is likely.
