EU.- Private activity in the euro area rebounded in November, with Spain leading the way, according to PMI

12-01-2021 A worker in a store that sells and rents snow equipment shows several ski poles to a customer three days after the historic snowfall registered in Madrid, (Spain), on January 12, 2021. A One of the most representative images after the passage of the ‘Filomena’ storm, which has caused the accumulation of more than 30 centimeters of snow in the capital, has been that of thousands of people skiing, sledding and wearing characteristic clothing of ski slopes. skiing through the streets of Madrid, an activity that has led to an increase in the demand for these materials. POLITICS Marta Fernández Jara – Europa Press


Growth in private sector activity in the euro zone accelerated last November, as reflected in the Composite Purchasing Managers Index (PMI), which rose to 55.4 points from 54.2 in the previous month , with Spain as the major economy with the best performance in the month, while Germany and France offered the least vigorous expansion readings.

In November, the PMI for the euro zone services sector stood at 55.9 points, compared to 54.6 in the previous month, while the manufacturing index reached 58.4 points from 58.3 in October.

Despite the improvement observed in November, those responsible for the PMI survey, prepared by IHS Markit, warned that the rise in monthly data “masks uneven recoveries by country and sector.”

Specifically, the best readings of the composite PMI in November corresponded to Ireland, with 59.3 points, ahead of Spain, with 58.3 points, followed by Italy, 57.6, while France and Germany closed the survey with 56 , 1 and 52.2 points, respectively.

In this regard, Chris Williamson, chief economist at IHS Markit, explained that growth has moderated particularly in Germany and France, where supply shortages have had a stronger chain effect from the industrial sector to services, while Spain and Italy register more robust rates of expansion, “although even in these countries the recent increases are in danger if it is necessary to intensify the social restrictions”.

“It seems likely that the improvement in the rate of economic growth indicated by the PMI index of the euro zone is short-lived,” said the expert, as the expectations of the companies consulted for the future fell due to increased concern about the pandemic, even though the survey data was collected before news of the omicron variant emerged, which will inevitably weigh down expectations further.

On the other hand, Williamson noted that while the risks to euro zone growth “have shifted to the downside,” the risks to the inflation outlook “appear tilted upward” if the numbers of virus infections they continue to rise and new restrictions are introduced.

“Supply chains will be hit harder, staff availability will decline and spending could shift back from services to products, further aggravating the supply-demand imbalance,” he warned.

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