Fall in Eurozone business activity unexpectedly moderates in November — S&P Global
By Scott Kanowsky
Investing.com — The rate of decline in business activity in the eurozone unexpectedly moderated in November but remained well within contraction territory, according to a key gauge of conditions for the currency bloc’s manufacturing and services sectors on Wednesday.
S&P Global’s flash Eurozone composite purchasing managers’ index rose slightly to 47.8, up from 47.3 in October. Economists had predicted that the figure would decrease marginally to 47.0.
It is the highest level in two months, but the fifth straight month that the reading has come in below the 50 mark that separates growth from contraction.
In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, said that the continued slip in business activity in November «adds to the chances» of the Eurozone dipping into a recession. But he said the data also showed some «tentative good news.»
«Most encouragingly, supply constraints are showing signs of easing, with supplier performance even improving in the region’s manufacturing heartland of Germany. Warm weather has also allayed some of the fears over energy shortages in the winter months,» Williamson added.
Manufacturing helped drive the uptick in composite PMI, analysts at ING said, pointing in particular to the index measuring output for the sector, which expanded to 45.7 from 43.8. The survey tracking activity in the services sector, meanwhile, was 48.6, unchanged versus the prior month.
New orders were lower in both sectors, signaling that many companies may be reliant on existing backlogs of work to maintain business activity.
S&P Global noted that while business sentiment remained gloomy by historical standards, with demand falling at a steep rate and employment growth pulling back, this trend is helping fuel a cooling in price pressures. Firms’ expenses moved up at the slowest pace in 14 months, albeit with inflation rates still elevated.
On a country-by-country basis, Germany posted its first improvement in business activity since Russia’s invasion of Ukraine. S&P analysts, however, flagged that the November survey does not «alter the narrative that Europe’s largest economy is likely heading for a recession.»
Output in France registered its first drop in business activity since February 2021, due in part to a slump in its crucial services sector.
The ING analysts argued that the PMI figures «confirm» that the Eurozone economy is sliding into a downturn in the final three-month period of 2022, despite the region managing to eke out positive growth in the third quarter.
«At the moment, we can say that the recession is everywhere except for in the GDP statistics,» ING analysts said.
