In November, the euro area's private sector slipped back into negative territory, with services activity contracting for the first time in ten months, aligning with the continued downturn in manufacturing, as per the latest S&P Global survey published on Friday.
The composite output index fell to 48.1 in November, marking its lowest level since January, down from 50.0 in October.
This decline was notable as both the services and manufacturing sectors reported output decreases for the first time since January. There were steeper declines in new business across both sectors, and international demand also saw its most significant drop since the end of 2023.
Business confidence took a sharp downturn, reaching its lowest point since September 2023, predominantly affecting the services sector.
Employment within businesses decreased for the fourth consecutive month in November. Additionally, evidence of spare capacity persisted in the private sector, highlighted by another decline in backlogs of work.
On the pricing front, the survey indicated that input cost inflation surged to a three-month high, while output prices ascended at a faster rate than in October.
Chief Economist at Hamburg Commercial Bank, Cyrus de la Rubia, remarked, "The situation could hardly be more dire."
"The eurozone's manufacturing sector is deeply mired in recession, and now the services sector is beginning to struggle after two months of minimal growth," de la Rubia continued.
"It comes as no real surprise, given recent political instability in major eurozone economies—France's government is unstable, and Germany is heading toward early elections," the economist explained.
Output in Germany and France declined more significantly than in October, with France experiencing the most substantial drop in activity since January.
Germany's private sector persisted in its contraction in November, as continuous weakness in manufacturing output was exacerbated by the first decline in services activity in nine months.
The HCOB flash composite output index decreased to 47.3 from 48.6 in the previous month, signaling an accelerated decline in activity at the fastest rate since February.
For the first time in nine months, services business activity entered contraction in November. The services PMI fell to 49.4, down from 51.6 in the previous month, missing the expected score of 51.8.
Meanwhile, the manufacturing PMI rose to a four-month high of 43.2 from 43.0 in the previous month, slightly exceeding the forecast of 43.1.
France's private sector saw the most significant contraction since January due to sustained weak demand dampening expectations. The flash HCOB composite output index notably dropped to 44.8 in November, from 48.1 in October.
This marked the third consecutive monthly decline in private sector output, signaling the steepest contraction since January.
The services PMI decreased more than anticipated, falling to 45.7 from 49.2 in the previous month, with a predicted score of 49.0. The manufacturing PMI registered 43.2, down from 44.5 in October, despite expectations of a slight rise to 44.6.
