Eurozone Economy Slips Back into Contraction
According to the latest HCOB PMI survey data, the Eurozone economy has started to contract again in the penultimate month of 2024. After stabilizing in October, business activity levels experienced their fastest decline since January due to a new drop in service production. The seasonally adjusted HCOB Eurozone Composite PMI Output Index, which showed a slight recovery to 50.0 in October, fell back into contraction territory in November. The headline index, at 48.3, marked the lowest level in 10 months, indicating a renewed decline in private sector business activity across the Eurozone.
The Services PMI dropped from 51.6 in October to 49.5 in November, the lowest level in the last 10 months. Weak demand conditions have remained pronounced across the Eurozone, with new private sector orders contracting for the sixth consecutive month at the fastest pace seen in the past year. Notably, there was a significant decline in sales to out-of-home customers. Employment continued to decrease, and business confidence fell to its lowest level in the past 12 months. Meanwhile, input cost and output price inflation rates reached their highest levels in the last three months.
The latest data shows that economic activity levels have dropped due to a continued decline in demand for goods and services. In November, new business orders contracted for the sixth consecutive month across the Eurozone, with the pace of decline representing the sharpest drop since the beginning of the year.
Regarding employment, the latest HCOB survey data revealed that firms in the Eurozone have made further cutbacks. Although the decrease in personnel levels was only marginal, it was the second-fastest decline since December 2020 (following October). While the pace of job creation in the service sector increased, the decline in employment was exclusively driven by manufacturers.
Looking ahead to the next 12 months, Eurozone companies recorded balanced positive expectations. However, the degree of optimism has fallen to its lowest level in the past year and remained significantly weaker than its long-term average.