Euro Area PMI November 2021

Euro Area: Business activity growth strengthens in November, despite high inflation and protracted supply shortages

November 24, 2021

The flash Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, rose to 55.8 in November from 54.2 in October, coming in above market analysts’ expectations. Consequently, the index moved further above the 50-threshold that distinguishes expanding from contracting activity in the private sector.

Both sectors moved further into expansionary territory in November, as activity increased at the fastest pace in two months in the manufacturing sector and at the strongest pace in three months in the services sector, despite prolonged supply constraints. Meanwhile, new orders continued to expand at a robust rate, while the pace of job creation accelerated to the joint-highest in over 21 years.

On the price front, input costs surged at the fastest pace on record amid ongoing supply shortages and the sharpest rise in backlogs of uncompleted work in three months. This translated into the quickest increase in output prices on record. Lastly, business optimism weakened for the fifth consecutive month—reaching its lowest level since January—amid concerns over the impact of the pandemic on supply chains and the impact of further Covid-19 waves.

Assessing the Eurozone’s two largest economies, growth in business activity strengthened in both France and Germany, although it accelerated the most in France.

Commenting on the release, Chris Williamson, chief business economist at IHS Markit, said:

“Stronger expansion of business activity in November defied economists’ expectations of a slowdown, but is unlikely to prevent the Eurozone from suffering slower growth in the fourth quarter, especially as rising virus cases look set to cause renewed disruptions to the economy in December.”

Meanwhile, Bert Colijn, senior Eurozone economist at ING, stated:

“The eurozone economy still showed decent growth at the start of the fourth quarter despite growing economic headwinds. More importantly, price pressures continued to mount according to the survey, adding to our view that the ECB is set to move towards starting tapering.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 4.7% in 2022, which is up 0.2 percentage points from last month’s forecast. For 2023, panelists see fixed investment increasing 3.4%.


Author: Massimo Bassetti, Senior Economist

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Note: IHS Markit Purchasing Managers’ Index (PMI) Composite Output Index. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: IHS Markit


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