Eurozone service sector inflation falls back but costs remain high, which may support ECB's decision to hold steady in December.

Cyrus de la Rubia, Chief Economist of Hamburg Commercial Bank, stated that the service sector in the Eurozone has been growing continuously for six months, with the growth rate reaching a new high since May 2023. The Eurozone service sector is showing clear signs of recovery, with its strong performance even enough to offset the weakness in manufacturing. This means that the economic output growth in the Eurozone in November has slightly accelerated compared to the previous month. Therefore, we expect a slight acceleration in the growth rate in the fourth quarter of this year. The inflation indicator closely monitored by the European Central Bank the service sector inflation rate has significantly fallen again. At the same time, cost inflation remains higher, which may be due to a slowdown in wage growth but still above average levels. Overall, the European Central Bank is likely to believe that its clearly communicated policy stance maintaining interest rates at the upcoming central bank meeting is supported by the data.