Eurozone economy 'near-stagnant' - survey

Economic activity in the eurozone improved a touch in November, although growth levels remain among the lowest of the past six years as the struggling manufacturing sector weighed heavily.

The final IHS Markit eurozone composite purchasing managers' index was 50.6, unchanged from October but slightly above the initial flash forecast and consensus, both of which were 50.3. The reading remained one of the lowest since 2013, however.

The services sector was the main growth driver, with the services business activity index coming in at 51.9, although that was lower than October’s 52.2. Manufacturing output fell again and has now been in contraction for ten consecutive months. Producers did, however, report their slowest fall in production since August.

France was the best-performing country, with a composite PMI of 52.1 - though that itself was a two-month low - followed by Ireland’s 52.0, a five-month high. Spain recorded a PMI of 51.9, but the economies of Italy and Germany both shrank, with readings of 49.6 and 49.4 respectively.

Anything above the 50.0 mark indicates growth while anything below signals contraction.

Chris Williamson, chief business economist at IHS Markit, said: "The final eurozone PMI for November came in slightly ahead of the earlier flash estimate, but still indicates a near-stagnant economy. The survey data are indicating GDP growth of just 0.1% growth in the fourth quarter, with manufacturing continuing to act as a major drag.

"New orders have not shown any growth since August, underscoring the recent weakness of demand, which sharply declining orders for manufactured goods accompanied by substantially weaker gains of new business into the service sector."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "An upward revision to the German services PMI, to 51.7 from the initial estimate of 51.2, was the main driver of the marginal upward adjustment to the headline, offsetting a downward revision to the French data. In short, eurozone PMI data are mixed, but remain soft overall.

"The composite PMI points to GDP growth of 0.0-to-0.1% quarter-on-quarter in the fourth quarter, but the survey has been a bit too pessimistic this year. Our baseline for the fourth quarter is 0.2%, a dip in the year-on-year rate to about 1.0%, though we need more hard data to substantiate this call."

The eurozone composite PMI is compiled from survey data collected from a representative panel of around 5,000 manufacturing and services firms. The data was collected between 12 and 26 November.