- Prior 51.4
- Manufacturing PMI 45.9 vs 45.3 expected
- Prior 45.0
- Composite PMI 49.7 vs 49.8 expected
- Prior 49.6
The manufacturing sector in the region continues to keep in contraction territory while services activity is continuing to slow further going into Q4. At the balance, it reaffirms that the Eurozone economy is stuck in a rut as it faces up against stagnation in October. Looking at the details, demand conditions remain on the softer side while new orders were marked down for a fifth month running.
Besides that, business confidence is subdued while employment conditions also fell for a third straight month. Looking at price pressures, at least inflation is seen cooling slightly overall but there are some mixed signals. Input prices for services increased sharply on the month but at a lower pace at least than the series average.
HCOB notes that:
“The eurozone is stuck in a bit of a rut, with the economy contracting marginally for the second month running. The ongoing
slump in manufacturing is being mostly balanced out by small gains in the service sector. At the country level, it can be
noted that the deterioration of the situation in France was met by a slight moderation in the decline in Germany. For now, it is
not clear whether we will see a further deterioration or an improvement in the near future.
“The eurozone’s service sector continues to grow, but only slightly, helping to keep the broader economy near stability.
However, we shouldn’t expect too much in the near future. Companies in this sector are seeing fewer new orders, and the
backlog of work has been shrinking for six months straight. For the first time since early-2021, service sector hiring has
almost come to a halt. The real question is whether the combination of higher wages and lower inflation can revive
consumer spending, which would give service providers a much-needed boost.
“For the European Central Bank (ECB), the latest figures come with an unwelcome surprise. Inflation in the services sector
seems likely to stay elevated, as costs and selling prices in October rose faster than the previous month. This is probably
due to persistent wage pressure, which impacts service providers especially hard. All this backs the idea that the ECB is
likely to cut key interest rates by just 25 basis points in December, rather than the 50 basis points some have been talking
about.”