Eurozone business activity was a little firmer than expected in November although overall output continued to decline. At 47.1, the flash composite output index was 0.4 points stronger than the market consensus and up from October's 3-year low of 46.5 but still below the 50-expansion threshold. This was the sixth consecutive month in which total output has contracted.

Both manufacturing and services lost further ground but at a slower rate than at the start of the quarter. The manufacturing flash sector PMI weighed in at 43.8, up from 43.1 and a 6-month high, while its services counterpart rose from 47.8 to 48.2.

Aggregate new orders fell again but by less than in October and backlogs were down for an eighth straight month. Weak demand saw firms reduce employment for the first time since January 2021, albeit only marginally. Purchasing activity followed suit and supplier delivery times shortened further. Looking ahead business confidence in the coming year was unchanged versus October and so remained mildly positive.

Despite another drop in manufacturing, aggregate input costs increased by the most since May, largely on the back of higher wages in services. Output prices saw a similar pattern.

While slightly firmer than expected, the November results still point to another contraction in Eurozone GDP this quarter. However, the ECB will note the acceleration in inflation in services so early cuts in official interest rates are still off the table, a point likely to be stressed at the central bank's meeting next month. Today's update nudges up the Eurozone's RPI to 5 and the RPI-P to 1, both readings showing that economic activity in general is performing much as forecast.

The composite is expected to edge higher in November to 46.7 versus 46.5 in October. Manufacturing is expected at 43.3 versus October's 43.1 with November services expected at 48.0 from 47.8.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The survey, produced by S&P Global uses 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.