Eurozone Growth Holds as Services Offset Factory Weakness in November
The euro area’s economy continued to expand in November, even as manufacturing momentum slipped back into contraction. Flash PMI readings point to a services-led recovery that is keeping overall activity in positive territory, while mixed inflation signals suggest the European Central Bank can remain patient.
Preliminary data show the Eurozone composite PMI at 52.4 in November, a touch below expectations of 52.5 and marginally softer than October’s 52.5. Manufacturing PMI fell to 49.7 versus a 50.2 consensus and 50.0 previously, signaling a renewed contraction in factory activity. The broader takeaway: services demand is cushioning the slowdown in goods, keeping the region’s growth intact.
Survey commentary highlights subdued order books and ongoing inventory reduction across manufacturers, with companies scaling back both intermediate and finished goods. This points to a still-downbeat industrial cycle and suggests a more durable upturn in manufacturing may take months to materialize. Germany and France—the bloc’s two largest economies—saw factory indices weaken, with German production hovering near expansion while France recorded a sharper decline, reflecting cautious investment amid political uncertainty.
Services remain the bright spot. While Germany’s services growth cooled, French providers returned to expansion, helping maintain a steady pace of activity across the Eurozone. Price dynamics were mixed: input cost inflation in services accelerated, but selling price growth eased. On balance, that combination is unlikely to prompt tighter monetary policy, reinforcing expectations that the ECB will leave interest rates unchanged in December.
Key Points – Eurozone composite PMI came in at 52.4 (52.5 expected), indicating continued expansion. – Manufacturing PMI slipped to 49.7 (50.2 expected), down from 50.0, signaling renewed factory contraction. – Weak demand and falling new orders drove sharper inventory drawdowns in manufacturing. – Germany and France saw manufacturing conditions deteriorate; German output near flat, French contraction deepened. – Services supported overall growth, with France’s services returning to expansion despite a slowdown in Germany. – Mixed inflation signals in services reduce pressure on the ECB; rates are likely to remain on hold in December.
