The PMI for the services sector, the most reliable economic barometer for the Euro area, improved slightly to 48.2 but remained firmly in recession in November. Despite an increase of 0.7 points to 43.8, the manufacturing index also offers little hope of a turnaround in the industrial sector.

We do not expect the Euro area economy to emerge from recession until the spring, and then to pick up significantly. 

The strong upswing that usually follows a recession is unlikely to materialize as the ECB will probably remain on the brakes. It will have to revise its economic outlook further downwards. In its September projections, it still expected the Euro area economy to avoid recession. However, with inflation remaining high, the ECB is unlikely to start cutting rates until late 2024.