Euro Zone Services, Composite PMI Final Reading Confirms Easing Growth, While UK Maintains Historic High

The euro zone’s manufacturing sector remained buoyant in November, with the rate of expansion accelerating to a three-month high, but momentum in the service sector slipped to its lowest since August, the final reading of the purchasing managers’ index, or PMI, data released by Markit on Wednesday showed. Meanwhile, the UK’s service sector maintained a historically high rate of growth.

Euro zone’s composite output PMI in November, based on surveys of manufacturing and service sectors, was revised up to 51.7 in the final reading from 51.5 in a flash estimate, but below October's 51.9 reading. The region's service sector PMI was revised up to 51.2 from a flash reading of 50.9, but still remained lower than October’s 51.6 reading. Manufacturers and service providers saw an increase in new business inflows, although the rate of growth remained modest.

The UK service PMI in November was revised down to 60.0, which, despite being a five-month low, indicated a sharp pace of growth. The final reading was down from October's multi-year high of 62.5 and also lower than a flash reading of 62.0 released earlier.

“The final PMI data confirm that the euro area’s recovery lost some momentum in November,” Chris Williamson, chief economist at Markit, said in a statement. On the other hand, the UK PMI showed “an impressively strong pace of expansion and one of the best performances for the sector we’ve seen since data were first collected in 1996,” he said.

Germany led gains in the euro zone, recording an all-sector output growth with a 29-month high reading of 55.4, while France and Italy reported contraction, slipping to five-month lows of 48.0 and 48.8 respectively.

Job-shedding in the euro zone continued in November, extending the current trend of 23 months of decline with France, Italy and Spain leading the losses, while Germany and Ireland created jobs.

“There are some encouraging signs of robust growth in some countries, especially Germany, where the PMI indicates we may see the economy grow by 0.5% in the fourth quarter,” Williamson said. “However, declines in the PMIs for Italy and France raise the prospect of these countries’ economies contracting again in the fourth quarter, meaning Italy’s recession will have extended into a staggering tenth successive quarter and France will have slid back into a new recession.”