In November, the euro zone experienced a sharp decline in business activity, with a significant contraction in the services sector adding to the downturn already seen in manufacturing.
The final composite Purchasing Managers' Index (PMI), a key indicator of economic health, compiled by S&P Global for the currency union, dropped to 48.3, down from October's neutral score of 50.0.
Although the November figure was marginally above the preliminary estimate of 48.1, it remains below the crucial 50 threshold that distinguishes economic expansion from contraction. The downturn in services is particularly concerning as it had previously been supporting the overall economy.
This marks the sector's first contraction since January, as noted by Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, who highlighted the negative implications for growth prospects within the major euro economies.
The services PMI fell to 49.5 in November from 51.6, indicating the first contraction in the sector this year. Moreover, the composite new business index, which measures overall demand, saw a steep decline to 46.8 from 47.9, reaching its lowest point in 2023.
Despite the overall downturn, there was a slight increase in employment within the services sector, with the employment index inching up to 51.0 from the previous month's 50.3. This suggests that services firms are still recruiting even amidst reduced business activity.
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