Eurozone PMI November 2019


Eurozone: Composite PMI points to continued weakness in December

December 16, 2019

Leading indicators point to stagnating dynamics in the Eurozone’s economy in the last month of Q4. The Flash Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, came in at 50.6 in December, matching November’s reading—one of the worst prints in over six years. As a result, the PMI remained only slightly above the 50-point threshold that distinguishes expanding business activity from contracting business activity in the Eurozone.

The details of the release revealed that a sharper contraction in manufacturing activity was countered by more positive conditions in the services sector. The manufacturing PMI moved further below the crucial 50-point threshold, amid more pronounced drops in output and new orders. Meanwhile, the services sector continued to outperform the manufacturing sector, and it also gained steam compared to the previous month. Service sector activity strengthened from November, underpinned by stronger increases in output and new orders. That said, job growth lost pace in the services sector, and factory employment fell for the eighth consecutive month—so that the combined rate of job creation was the weakest in over five years. Meanwhile, firms’ expectations of future output dipped in the month and ran at one of the lowest levels in seven years.

Regarding the Eurozone’s two largest economies, Germany’s composite PMI lingered in contractionary territory for a fourth consecutive month but business conditions improved in France. Elsewhere, the PMI pointed to stalling activity in the region.

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

“The Eurozone economy closes out 2019 mired in its worst spell since 2013, with businesses struggling against the headwinds of near-stagnant demand and gloomy prospects for the year ahead. […] While service sector growth remains encouragingly resilient in the face of the manufacturing downturn, any further softening of the labour market could cause weakness to spill over.”

FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.0% in 2020, which is unchanged from last month’s forecast. For 2021, panelists expect the economy to grow 1.3%.

Author: Massimo Bassetti, Senior Economist

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Eurozone PMI Chart

Euro area PMI December 2019

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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