Fall in euro zone Nov business activity adds to recession expectations -PMI

© Reuters. FILE PHOTO: A waiter picks up the terrace of the Zurich bar at Placa de Catalunya in Barcelona, Spain April 4, 2023. REUTERS/Nacho Doce/File Photo

LONDON (Reuters) – The downturn in euro zone business activity eased last month but still indicates the bloc’s economy will contract again this quarter as the dominant services industry continues to struggle to generate demand, a survey showed.

Last quarter the economy contracted 0.1%, according to official data, and Tuesday’s Composite Purchasing Managers’ Index (PMI) for November indicated the 20-country currency union is on track to do so again this quarter, meeting the technical definition of recession.

HCOB’s composite PMI, compiled by S&P Global and seen as a good guide of overall economic health, rose to 47.6 from October’s near three-year low of 46.5 and coming in above a 47.1 preliminary estimate.

That was its best reading since July but remained firmly below the 50 mark separating growth from contraction.

A PMI for the services sector rose to 48.7 from October’s 47.8.

“The service sector maintained its downward slide in November. The modest improvement of the activity index does not leave much room for optimism regarding a swift recovery in the immediate future,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“The sombre outlook is reinforced by the fifth consecutive monthly shrinkage in new business. A fall in GDP is on the cards for the fourth quarter.”

An index measuring new business – a gauge of demand – was below 50 for a fifth month although it did rise to 46.7 from 45.6.

However, overall sentiment about the year ahead improved. The composite future output index rose to 56.0 from 55.6.


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