Eurozone PMI signals steep downturn in November amid COVID-19 lockdowns

According to the report from IHS Markit, Eurozone business activity fell sharply in November as countries introduced more aggressive measures to counter rising coronavirus disease 2019 (COVID19) infection rates.

The flash Eurozone Composite PMI slumped from 50.0 in October to 45.1 in November, its lowest since May. With the exceptions of the declines seen in the first two quarters of this year, the average PMI reading of 47.6 in the fourth quarter so far is the lowest since the closing quarter of 2012 (during the region’s debt crisis) and indicative of a steep decline in GDP.

The deteriorating performance was broad-based, albeit with the service sector hardest hit from virus containment measures. While manufacturing output growth merely slowed in November to the lowest since the start of the sector’s recovery back in July, attributable to a marked slowing in order book growth, service sector output fell for a third month running, with the rate of decline accelerating sharply to the fastest since May.

Inflows of new orders rose in manufacturing at the slowest rate recorded over the past five months, while new business placed at service providers collapsed to an extent not seen since May. Hospitality, travel and consumer-facing companies reported especially weak demand due to additional measures implemented by various governments across the region amid second waves of virus infections.

Looking ahead, business expectations about the coming 12 months recovered most of the slump seen in October to run at the second highest since February. Manufacturers were especially upbeat, with confidence rising to the strongest since March 2018, though service providers also grew more optimistic about the year ahead, commonly attributed to encouraging news of vaccine developments in recent weeks.