Data published by HCOB showed that business activity in the private sector of the eurozone declined moderately in November, reaching a 2-month low. Meanwhile, input cost inflation cooled but selling price inflation accelerated, the latter notably remaining elevated by historical standards.
The Eurozone Composite PMI Output Index fell in December to 47.0 points from 47.6 points in November. The index remains below the 50-point mark, which indicates a reduction in activity in the private sector, for the seventh month in a row. Economists had expected the index to rise to 48.0 points. The services PMI declined to 48.1 points from 48.7 points in November, while the manufacturing PMI remained at 44.2 points. Economists had expected the services PMI to rise to 49.0 points and the manufacturing PMI to reach 44.6 points.
HCOB said that new orders in the private sector fell for the seventh month in a row, with the rate of decline remaining unchanged on the steep pace seen in November. Backlogs of work also fell sharply, recording the 17th decline in the last 18 months, and accelerating compared to November. Private sector employment declined for the second month in a row as companies cut production capacity amid softening demand. Although only modest, the recent falls in employment are the first recorded since early 2021. Along with the reduction in employment, manufacturers reduced their purchasing activity at one of the highest rates recorded since the global financial crisis, which led to the largest reduction in raw materials stocks since November 2009. Meanwhile, firms grew more optimistic regarding the year-ahead outlook for output in December, with sentiment at its brightest since August.
Commenting on the latest data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said that “the figures paint a disheartening picture as the Eurozone economy fails to display any distinct signs of recovery. On the contrary, it has contracted for six straight months. The likelihood of the Eurozone being in a recession since the third quarter remains notably high".