Business activity in the eurozone remained steady in November, sustaining the solid pace of growth seen in October, largely driven by the services sector. However, rising costs and weakening manufacturing activity continue to pose challenges for the region’s economy, according to flash data from S&P Global.
The eurozone Composite Purchasing Managers’ Index (PMI) edged slightly lower to 52.4 in November from 52.5 in October, signaling ongoing expansion. Services led the growth, with the sector’s PMI rising to 53.1, its highest level since May 2024, surpassing expectations of a modest slowdown. Manufacturing, by contrast, lost momentum. The sector’s PMI fell to 49.7, the weakest reading in five months, reflecting persistent headwinds and declining external demand. Export orders, both within and outside the eurozone, fell for a second consecutive month.
Businesses reported a sharp rise in input costs, the fastest since March. In services, cost pressures intensified, while manufacturers faced the steepest rise in input prices in eight months. Despite these increases, companies struggled to pass the higher costs to customers. Output price inflation slowed to its lowest pace in over a year, with manufacturing prices largely flat and service price growth moderating to levels not seen since April 2021. Economists warned that the divergence between input and output prices points to rising pressure on profit margins.
Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said the acceleration of cost inflation in services could be a concern for the European Central Bank, but the moderation in sales price inflation is likely to limit immediate policy pressure. He expects interest rates to remain unchanged in December.
Regional trends within the eurozone were mixed. Germany, the bloc’s largest economy, showed signs of slowing. Its Composite PMI declined to 52.1 from 53.9 in October, with both manufacturing and services losing pace. Manufacturing fell to 48.4, while the services index dropped to 52.7. France showed signs of stabilisation after months of contraction, with its Composite PMI rising to 49.9, driven by a rebound in services to 50.8. Manufacturing in France remained weak at 47.8.
Outside Germany and France, the rest of the eurozone experienced its strongest improvement since April 2023, supported by resilient services activity.
Markets responded to the data alongside global developments. European equities fell, with banking and industrial stocks leading declines. The Euro STOXX Banks Index fell 1.3%, while Germany’s DAX slipped about 1% to near 23,000, hit by steep losses in Siemens Energy and Rheinmetall. The Euro STOXX 50 dropped more than 1%, dragged down by a 6% decline in chipmaker ASML Holding NV. Italy’s FTSE MIB fell 1.1%, with Leonardo Spa down nearly 6%, while France’s CAC 40 declined 0.5%, led by a 2.5% drop in Schneider Electric.
Rising costs, uneven manufacturing performance, and global market pressures suggest that while the eurozone economy continues to expand, growth remains fragile.
