Eurozone manufacturing looks better but services are weak. Beware of Eurozone aggregates, however. This is turning into a 3-speed economic region: a stronger North, a weak South, and France…

At 51.5, down from 51.9 in October, the flash estimate of the Markit Eurozone PMI® Composite Output Index remained above the 50.0 no-change level for a fifth successive month in November, but signalled a modest easing in the rate of expansion for the second month running.
Output growth in manufacturing stabilised at a robust rate and remained stronger than service sector expansion, which eased to the weakest since August.


Trends were also varied by country. The composite PMI covering both manufacturing and services in Germany rose to its highest since January, signalling increasingly robust growth and a seventh successive monthly expansion.

In contrast, the comparable index for France fell to its lowest since June, signalling a renewed decline after just two months of fractional growth. Elsewhere across the region, output rose for the fourth month in a row, but the rate of increase was the weakest seen over that period.


Eurozone private sector new orders rose for the fourth consecutive month, with the rate of increase unchanged on the very modest pace seen in October. Growth of manufacturing new orders accelerated to the strongest since August, fuelled by the largest rise in new export orders since May 2011. However, new business expansion in the service sector slowed for the second month in a row.


Private sector employment in the eurozone fell for the twenty-third consecutive month, with the rate of job losses accelerating marginally for the second successive month. Manufacturers reported the smallest drop in payroll numbers since July, while employment in the services sector fell at the strongest rate since August.

By country, staffing numbers rose for the third time in five months in Germany, but fell at the steepest rate for six months in France. Elsewhere, the rate of job shedding eased to the second-lowest seen for over two years.

The volume of outstanding business fell marginally again, as a steepening rate of decline in services was partly offset by the largest rise in manufacturing backlogs since May 2011.

Input costs rose for the sixth month running, rising at the fastest rate since September of last year. The strengthening in inflation was reflected in both manufacturing and services.

Output prices meanwhile continued to fall, dropping to the greatest extent for three months. Prices charged for goods showed the steepest monthly increase since August 2011, but charges levied for services showed the strongest fall for four months.


Here’s what Markit wrote on France:

The Markit Flash France Composite Output Index posted 48.5, following two successive months in which the index registered 50.5. Lower output was signalled by companies in both the services and manufacturing sectors.

Service providers indicated a drop in activity for the first time in three months. Although modest, the rate of contraction was the sharpest since July. Manufacturers meanwhile recorded a fall in production for the fourth month running, and the most marked decline since May.

November data pointed to a second successive monthly decrease in new business placed with French private sector firms. (…) Whereas service providers noted only a marginal fall in new business during the latest survey period, manufacturers signalled the most marked drop for seven months, with export sales decreasing for the first time since August.

(…) Outstanding business fell for the second consecutive month and at the sharpest rate since May. Service providers and manufacturers both indicated faster declines in unfinished work.

(…) The rate of job shedding was the fastest since May. Staffing levels were down in both the services and manufacturing sectors.

(…) output prices were reduced further in November; the latest fall was the sharpest in three months. Service providers signalled a solid decrease in charges, whereas manufacturers noted broadly no change.

Contrast that with Germany:

Overall levels of new work received in the German private sector increased at the most marked pace for almost two-and-a-half years in November. In the manufacturing sector, latest data pointed to the steepest rise in new export work since February, but survey respondents continued to cite weak demand conditions within the euro area. Across the service sector, new business has now risen for five months in a row, which is the longest expansionary period since the upturn in 2010/11. A number of service providers noted that improvements across the wider domestic economy had encouraged clients to commit to new projects.

Weak demand within the euro area. That is France and Italy.


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