|Composite - Level||54.1||53.9||53.3|
|Services - Level||54.1||53.8||52.8|
Eurozone economic activity was revised just slightly softer in the final November PMI report. At 53.9, the composite output index was 0.2 points short of its flash estimate but still 0.6 points above it final reading in October and at its highest level since December 2015.
The minor downward revision reflected a slightly softer services sector where the flash PMI was shaved 0.3 points to stand at 53.8, still a full point stronger than its final mark at the start of the quarter and an 11-month peak. Crucially, new business continued to expand and, supported by a further accumulation of backlogs, job creation remained positive for a twenty-fifth straight month. Business optimism dipped versus October's high but was also above its long-run average.
Input costs rose at the quickest pace in four months and, significantly, selling prices increased for the first time since September last year, albeit only moderately.
In terms of composite output, the best performer was Ireland (55.5) ahead of Spain (55.2) and Germany (55.0). Italy (53.4) achieved a 9-month high but France (51.4) again underperformed with a 4-month low.
November's revised data leave Eurozone growth this quarter on course for something close to 0.4 percent. While hardly anything to write home about, this would still be double the rate registered in the previous two quarters and potentially enough to see the ECB hold steady on Thursday. That said, if inflationary pressures are building, they are doing so only slowly so the risk of some form of easing is likely to be around for some time yet.
The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by Markit using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
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