By Xavier Fontdegloria
Eurozone economic growth picked up slightly in November compared to the previous month, but persistent supply bottlenecks and rising Covid-19 cases have clouded the near-term outlook, according to a survey of purchasing managers.
The flash reading of the eurozone’s composite production index rose to 55.8 in November from 54.2 in October, a two-month high, according to IHS Markit data released on Tuesday. Economists polled by the Wall Street Journal expected the PMI to drop to 53.2.
The index is based on data from the company’s PMI surveys for the manufacturing and service sectors. Any number above 50 indicates growth, while a level below 50 indicates contraction.
“A stronger expansion in business activity in November defied economists’ expectations of a slowdown, but is unlikely to prevent the eurozone from experiencing slower growth in the fourth quarter, especially since the increase virus cases are expected to cause further disruption to the economy in December, “said Chris Williamson, chief economist at IHS Markit.
By sector, services outperformed manufacturing for a third consecutive month. The goods-producing sector remained crippled by supply delays, while service providers saw an improvement in performance that could prove shortlived if further Covid-19 restrictions were to be imposed, a said Mr. Williamson.
The survey was carried out between November 10 and 19, so it is likely that the results did not fully capture the effect of the new Covid-19 restrictions imposed in some countries. Still, optimism among those polled has fallen to its lowest level in 10 months due to renewed concerns about Covid-19, according to the report.
Write to Xavier Fontdegloria at [email protected]