Eurozone Private Sector Growth at 15-Month Low

07 December 2004

Service sector activity growth within the Eurozone slipped in November, with near-stagnation of new business across the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area.

The seasonally adjusted monthly Reuters Report on the Eurozone saw its Business Activity Index fall from 53.5 in October to 52.6 in November. Although remaining above the 50.0 no-change level and thereby indicating an expansion of activity for the seventeenth straight month, the rate of increase was the weakest in fifteen months.

Services activity continued to increase in each of the euro area's four largest economies, but in all cases the rates of growth slowed. In Germany, in particular, growth fell to only a marginal rate, rising at the weakest pace recorded since activity began rising in August of last year.

Of the other Eurozone 'big four'members, France saw the fastest pace for the second month running, although the rate remained well down on that seen at the start of the year. In Italy and Spain, meanwhile, growth slowed to fourteen- and fifteen-month lows respectively.

The same trend was reflected in the manufacturing category which, in common with the services sector, saw a marked slowdown in growth. Combined key findings for both sectors during November are as follows ...

  • Output
    The Composite Output Index fell from 53.7 in October to 51.7 in November, to register an expansion of private sector output for the sixteenth successive month. However, the rate of increase fell for the fourth successive month, dropping to the weakest since August of last year.

  • New Business
    The index fell from 52.3 in October to 50.3 in November, registering an easing in the rate of increase for the fifth consecutive month. The marginal rise in new business signalled for the month was the weakest since the latest upturn began back in August of last year.

  • Input Prices
    This index indicated a further steep rise in average input prices in November. Although falling back from the four-year high seen in October, the rate of input price inflation remained well above the long-run average seen since the survey began in July 1998.

  • Employment
    The index registered 49.5, down from 50.2 in October, signalling a small drop in private sector staffing levels. Higher employment in the service sector was more than offset by an increased rate of job losses in the manufacturing sector.

    The Eurozone indices are currently based on data from panels in Germany, Italy, France, Spain and Ireland. Combined, these countries account for an estimated 83% of Eurozone private sector services output.

    For more information on the Eurozone Reports click here.

    Data sourced from NTC Research; additional content by WARC staff NTC Research