Eurozone November PMI stays strong, reinforcing expectations for ECB to pause rate cuts.

In November, the private sector economic activity in the Eurozone continued to show strong momentum, raising expectations for an acceleration in economic growth in the last few months of the year. The Eurozone's November SPGI Composite PMI stood at 52.4, almost unchanged from October's 52.5, and still above the critical 50 level that separates growth from contraction, with analysts expecting 52.5. In particular, the service sector recorded its best performance in a year and a half, helping to offset the unexpected weakness in manufacturing. The Eurozone's November SPGI Services PMI came in at 53.1, higher than market expectations. However, the Eurozone's November SPGI Manufacturing PMI unexpectedly fell to 49.7, below the expected 50.2. Germany continues to lead, although its economic expansion slowed down, with Germany's November SPGI Composite PMI dropping to 52.1, below expectations. Meanwhile, France's economic performance exceeded expectations, with its November SPGI Composite PMI at 49.9, although still below the breakeven level. France's long-standing budget issues also had an impact. Jonas Feldhusen, economist at Hamburg Commercial Bank, said in a statement on Friday, "France's private sector economy showed signs of stabilization in November, after a slight dip in October. Given the unresolved budget issues and ongoing political tensions, this stabilization is still fragile." Cyrus de la Rubia, economist at Hamburg Commercial Bank, said on Friday, "The Eurozone's economic expansion remains stable overall. While manufacturing to some extent is holding back the pace of economic growth, the service sector plays a significant role in the overall economy, indicating that the Eurozone's growth rate in the fourth quarter should be faster than in the third quarter." Despite the impact of the US trade dispute, the performance of the European economy has exceeded expectations. It is expected that by 2026, as a series of new investments in infrastructure and military sectors start to take effect, the economic growth rate will remain close to this year's level. However, this overall data masks differences among the 20 Eurozone member states, with about half of the countries (in terms of output) failing to achieve growth in the third quarter. For the European Central Bank, the current economic situation is not yet sufficient to warrant further rate cuts, after rates were already halved from their peak level of 4%. The current inflation rate has risen to near the target level of 2%, and most officials believe this level will remain unchanged in the near future. de la Rubia stated that the survey results for November show that there has been a slight increase in the rate of cost growth in the service industry, but this trend is being curbed by a slowdown in the increase in sales prices. He said, "Overall, the concerns for monetary policy makers focusing on inflation in the service sector should be limited. We expect rates to remain unchanged in December."