It seems there is no longer such a thing as the Eurozone. Germany is the only growth engine while France and Italy look increasingly problematic.
At 51.7 in November, down from 51.9 in October, the final Markit Eurozone PMI® Composite Output Index signalled growth of economic activity for the fifth consecutive month. However, despite also posting above its earlier flash estimate of 51.5, the output index indicated an easing in the rate of expansion for the second month running.
Manufacturing production continued to rise at a solid clip, with the rate of increase accelerating slightly to a three-month peak. The upturn remained comparatively subdued at service providers, however, with the rate of expansion in this sector slipping to its lowest since August.
Manufacturers and service providers continued to benefit from improved inflows of new business. Measured across both sectors, the combined rate of new order growth remained modest but was nonetheless the joint-highest during the past two-and- a-half years.
Trends remained varied by nation. Germany and Ireland led the pack by some distance, as output growth in Germany surged to a 29-month high while the expansion in Ireland was similarly robust despite easing to a five-month low. Spain also saw a modest expansion of output for the third time in the past four months, underpinned by the steepest gain in new business since July 2007.
In contrast, France and Italy slipped back into contraction following brief periods of output growth.
Eurozone employment fell again in November, extending the current unbroken sequence of decline to 23 months. France, Italy and Spain all
reported job losses during the latest survey month, although rates of decrease eased in the latter pair. The decline in France followed a slight increase in October. Job creation was registered in Germany and Ireland, with the gain in the former the steepest for 20 months.
Input price inflation accelerated to an 11-month high in November, reflecting strengthening cost increases at manufacturers and service providers alike. Output prices, meanwhile, fell for the twentieth straight month. France, Italy and Spain all reported solid reductions in charges, while Ireland also saw a marginal decrease. In contrast, output charge inflation in Germany hit a nine-month high.
At 51.2 in November, the Eurozone Services Business Activity Index signalled an increase in service sector output for the fourth successive month. However, the rate of increase was only modest and slipped to its weakest since August.
Germany and Ireland recorded strong increases in output, with growth hitting a ten-month high in Germany and remaining well above its long-run survey average in Ireland. Spain saw a modest expansion which was nonetheless the sharpest since June 2010. The real points of weakness were France and Italy, whose service economies fell back into contraction.
New business expanded for the fourth month running, with the rate of increase in line with September’s 27-month record. However, the modest gains in new orders and business activity failed to prevent further job losses. Service sector employment has fallen in every month since the start of 2012 except for a pause in September.
Jobs growth hit a near two-year peak in Germany. Conversely, France, Italy and Spain all registered solid reductions to payroll numbers.
Input cost inflation accelerated to an 11-month high in November, but remained below the long-run survey average. Service providers again struggled to pass on rising input prices, as highlighted by a further solid reduction in average charges. Germany remained the only nation to report an increase in selling prices.