The eurozone’s composite purchasing managers’ index (PMI) rose to 47.8 in November from 47.3 in October, which was the worst reading in nearly two years. However, the index remained firmly below the unchanged threshold of 50, indicating a further contraction in business conditions compared to the previous month.
The increase in November was driven by a less pronounced contraction in manufacturing activity. New orders fell at a lower rate. Moreover, business confidence has soared, although it remains weak by historical standards. On the price front, both input and output inflation fell, thanks to easing of supply constraints and lower demand. However, both remained high.
Commenting on the release, Chris Williamson, chief commercial economist at S&P Global Market Intelligence, stated:
“It is clear that manufacturing remains in an alarmingly severe recession, and service sector activity also remains under severe pressure, largely as a result of the cost of living crisis and the recent tightening of financial conditions. So a recession appears likely, although recent data provides The hope is that the magnitude of the downturn may not be as severe as previously feared.”
Meanwhile, Bert Cullen, chief economist at ING, said:
“The positive side of a clearly recessionary environment is that inflationary pressures are fading. Weaker demand, lower energy prices compared to August and easing supply-side issues are easing price pressures. While energy prices remain volatile, companies are likely to continue pricing through Some high costs incurred, these factors point to a turning point in the inflation rate at the turn of the year.”
FocusEconomics Consensus forecast committee members expect fixed investment to expand 3.6% in 2023, unchanged from last month’s forecast. For 2024, panelists see fixed investment increasing by 3.1%.