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Eurozone November final services PMI 55.9 vs 56.6 prelim

Latest data released by Markit – 3 December 2021

  • Composite PMI 55.4 vs 55.8 prelim

The preliminary report can be found here. Overall business activity picked up last month after having mostly slowed since July but the improvement belies the troubles faced by the manufacturing sector in particular.

Services activity held up modestly but with virus fears returning, that could dampen sentiment heading into year-end. As for the manufacturing sector, supply bottlenecks and rising cost pressures (accelerating inflation) will be persistent problems still.

Markit notes that:

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“An improvement in the rate of economic growth
signalled by the eurozone PMI looks likely to be
short-lived. Not only did demand growth weaken, but
firms’ expectations of future growth also sank lower
as worries about the pandemic intensified again.
With the data collected prior to news of the Omicron
variant, sentiment about near-term prospects will
inevitably have been knocked even further.

“Growth is looking especially subdued in Germany
and France, where supply shortages have had a
notably stronger knock-on effect from manufacturing
through to services. More resilient expansions are
being recorded in Spain and Italy, though even here
recent gains are at risk if social distancing
restrictions need to be stepped up.

“Prices have meanwhile continued their relentless
rise, with rates of inflation in both firms’ costs and
average selling prices for goods and services hitting
new highs in November.

“While growth risks have shifted to the downside,
risks to the inflation outlook seem tiled to the upside
if virus case numbers continue to rise and new
restrictions are introduced. Supply chains will be
further hit, staff availability will deteriorate and
spending could shift from services to goods again,
further exacerbating the imbalance of supply and
demand.”

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