Euro Zone Manufacturing Upbeat In November With Germany Leading Growth, While France Disappoints

Activity in the euro zone’s manufacturing sector rose to a 29-month high in November, in line with expectations, and its service sector activity also expanded in November, albeit at a slower rate compared to October.

A preliminary reading of the euro zone’s composite output purchasing managers’ index, or PMI, published by Markit on Thursday and based on surveys of the manufacturing and service sectors, was down to 51.5 in November, compared to 51.9 in October and below expectations of a 52.0 reading. Service sector PMI fell to 50.9 in November, compared to 51.6 in October, missing expectations of a 51.9 reading. In manufacturing, PMI edged up to 51.5 in November, as expected, compared to 51.3 in the previous month.

“Some encouragement must be gleaned from the PMI, signaling expansion of the euro zone economy for a fifth successive month in November, but the average reading over the fourth quarter so far is signaling a very modest 0.2% expansion of GDP across the region, and it looks like momentum is being lost again,” Chris Williamson, chief economist at Markit, said in a statement.

Germany’s factory activity echoed the growth in the euro zone manufacturing sector, with a PMI reading of 52.5 in November, up from 51.7 in October. The German service sector PMI was at 54.5, up from 52.9 in October, while its composite PMI was pegged at 54.3 in November, up from 53.2 in the previous month.

The French manufacturing sector contracted to 47.2 in November, down from 49.0 in October, while the country's service sector also slipped below the 50-point mark that separates expansion from contraction, to 48.8 in November, from 50.9 in October. The composite PMI fell to 48.5 in November, compared to 50.5 in October.

“Any improvements were largely confined to Germany, where the PMI has notched up the best growth since mid-2011 so far in the fourth quarter, signaling a 0.5% increase in GDP,” Williamson said. “France, on the other hand, showed further signs of being the 'sick man of Europe' with output showing a renewed decline, and raising the risk that GDP could fall again in the fourth quarter, constituting a renewed recession. Meanwhile growth outside the 'big two' slowed to near-stagnation.”