The Eurozone's economic activity contracted in November, with the flash composite PMI dropping to a 10-month low of 48.1, some 2.1 points below the consensus forecast and signalling the sharpest decline since January. Business activity fell across both manufacturing and services sectors, marking a renewed slump in demand. Manufacturing output, down for the 20th consecutive month, declined at an accelerated pace, 0.8 points faster decline than consensus, while services activity contracted for the first time in 10 months, albeit modestly.

New orders fell at the fastest rate in 2024, driven by weakening domestic and export demand. Confidence hit its lowest point since September 2023, with sentiment among service providers especially subdued. Pessimism prevailed in France, which experienced its steepest contraction since January, while Germany's activity also declined. The rest of the Eurozone saw only slight growth, marking the slowest expansion in 11 months.

Employment trends diverged, with manufacturing job cuts reaching the highest level since August 2020, while services added jobs at a four-month high. Inflation pressures ticked up, driven by rising service sector costs, while manufacturing prices declined amid weak demand. Inventories and purchasing activity also contracted sharply.

Today's results indicate mounting challenges for the Eurozone economy as it grapples with waning demand and fragile confidence. They also reduce the region's RPI to minus 31 and the RPI-P to minus 44, meaning that economic activity is lagging market expectations by some margin.

Forecasters look for the composite flash at 50.2, the manufacturing flash at 46.0 and 51.7 for services.

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.