Eurozone Business Activity Contracted in November

In November, the Eurozone experienced a sharp decline in business activity; the significant contraction in the services sector added to the ongoing downturn observed in the manufacturing sector. The final composite Purchasing Managers' Index (PMI), compiled by S&P Global and a crucial indicator of economic health, fell from a neutral score of 50.0 in October to 48.3.

Although the November figure was slightly above the preliminary estimate of 48.1, it continues to remain below the critical threshold of 50, which separates economic expansion from contraction. The decline in the services sector is particularly concerning, as it had previously supported the overall economy. According to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, this marks the sector's first contraction since January and poses negative implications for growth expectations in major Eurozone economies.

The Services PMI dropped from 51.6 in November to 49.5, indicating the sector's first contraction this year. Additionally, the composite new orders index, which measures overall demand, showed a sharp decline from 47.9 to 46.8, reaching its lowest level in 2023.

Despite the overall downturn, there was a slight increase in employment within the services sector; the employment index rose from the previous month's level of 50.3 to 51.0. This indicates that service firms are still hiring despite the decrease in business activity.