Eurozone, fresh contraction in business activity in November fuels recession fears

LONDON (Reuters) – The decline in business activity in the euro zone eased in November, but a survey indicated that the region’s economy will contract further in the current quarter as consumers continue to cut spending.

The economy contracted by 0.1% in the latest quarter, according to official data, and today’s composite PMI for November indicated that the euro zone should see a new contraction in the fourth quarter.

The HCOB Purchasing Managers’ Index, compiled by S&P Global and considered a good indicator of overall economic health, rose to 47.1 from a three-year low of 46.5 hit in October, but remained below the 50 threshold that separates growth from contraction.

A Reuters poll had expected a more modest rise to 46.9.

“The eurozone economy remains stuck. If we look at the preliminary November PMI data in our now model, a second consecutive quarter of GDP contraction can be expected,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Demand fell for the fifth month in a row, although at a slower pace than in October. The new business index rose to 46.7 from 45.6.

(Translated by Camila Burri, Edited by Stefano Bernabei)