Eurozone faces worst services drop since 2009

 
Ben Southwood
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THE EUROZONE’S service sector fell to an even steeper decline in November, data revealed yesterday, keeping overall activity at levels suggesting sharp economic contraction.

Service activity fell to 45.7 this month, the purchasing managers’ index (PMI) from Markit said, down from 46 in October and solidly below the 50 level indicating no change.

This fall meant that despite a rise in the PMI for manufacturing activity – from 45.4 to 46.2 – the headline number increased just 0.1 to 45.8. This figure, also well below 50, signifies substantial contraction in economic activity across the currency bloc.

“The Eurozone economy continued to deteriorate at an alarming pace in November, and is entrenched in the steepest downturn since mid-2009,” said Markit chief economist Chris Williamson.

Williamson warned that the data implied Eurozone economies could slip deeper into recession in the fourth quarter of the year. “Officially, the region saw only a very modest slide back into recession in the third quarter, with GDP falling by a mere 0.1 per cent, but the PMI suggests that the downturn is set to gather pace significantly in the fourth quarter.”

Both French and German PMI figures also improved – but both also stayed below 50. France, the bloc’s second biggest economy, saw an improvement in the indices for both manufacturing and services activity, bringing its headline number up from 43.5 to 44.6. Eurozone powerhouse Germany posted a better overall PMI – 47.9, up from 47.7 in October – but saw services fall to a 41-month low of 48.

This data came in tandem with figures on consumer confidence from the European Commission. Confidence dived to minus 26.9 in the euro area in November, the data showed, from minus 25.7 in October.