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Eurozone PMI falls as activity slows again
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Eurozone business activity slowed again in November, highlighting the dangers of a faltering recovery as the bloc struggles out of a record recession, a key survey showed yesterday.
Markit Economics, which compiled the report, said the figures suggested “momentum is being lost again” and warned that policymakers might have “to do more to prevent the eurozone from slipping back into another recession.”
The Eurozone Composite Purchasing Managers’ Index for November fell to 51.5 points from 51.9 in October, hitting a three-month low and short of forecasts for 52 points.
Although activity in November remained above the 50-point line indicating growth, this was the second monthly fall in a row for the closely-watched leading indicator, after October’s slip to 51.9 from 52.2 in September.
Among the most worrying details, activity in France, the second-biggest economy in the eurozone, shrank in November for the first time for three months, Markit said.
Recent reports from the European Commission, the Organization for Economic Cooperation and Development, and the Standard and Poor’s rating agency have all expressed deep concern at the French outlook.
French Finance Minister Pierre Moscovici said meanwhile in Paris that the “recovery is real but it is also fragile and we must continue the work of reform.”
The eurozone grew by 0.1 percent in the third quarter, down from 0.3 percent in the second when the bloc finally exited a record 18-month recession.
The November PMI report confirms continued weakness in an economy desperate for growth to mend some of the debt crisis damage, especially record unemployment at above 12 percent.
Markit said that other PMI measures reflected similar softness but manufacturing, a relatively small part of the wider economy, held its own.
The Eurozone Services PMI for November fell to 50.9 points from 51.6 in October while the Eurozone Manufacturing PMI edged up to 51.5 from 51.3.
Chris Williamson, Markit chief economist, said recent data suggested the economy will chalk up “a very modest 0.2-percent expansion” for the fourth quarter.
The November downturn also shows the European Central Bank was right to cut interest rates to a record low 0.25 percent at its last meeting, he said, pointing to “signs that deflationary forces may be gathering.”
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