According to the report from IHS Markit, driven by sharply reduced services activity, the eurozone’s private sector economy returned to contraction during November for the first time in five months.

Eurozone PMI Composite Output Index which recorded a level of 45.3, down from October’s 50.0 but slightly better than the earlier flash reading. The headline figure was driven lower by a downturn in service sector activity which fell to the greatest degree since May. In contrast, manufacturing output growth was sustained for the fifth month in a row, albeit at the slowest pace since July.

The downturn in private sector output was closely linked to restrictions on activity related to continued efforts to stem the spread of global coronavirus disease 2019 (COVID-19). With mobility and social contact restricted, new business volumes inevitably fell in November. 

The overall fall in new work was the greatest recorded by the survey since May, with notable weakness in sectors such as hospitality and tourism. There were also a decline in new export business, albeit only marginally, for the first time in three months.

Employment fell for the ninth month running, albeit at the weakest rate in this sequence with modest declines in both manufacturing and services. 

Meanwhile, input prices increased for a sixth successive month during November. The rate of inflation was solid, albeit a little lower than in the previous survey period. In contrast, output charges declined again, extending the current period of deflation to nine months.

The Eurozone PMI Services Business Activity Index fell sharply during November, declining to a level of 41.7 from 46.9 during October. Posting below the 50.0 no-change mark for a third successive month, the index signalled the sharpest contraction in services activity since May.