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Euro zone November business growth acceleration may be temporary -PMI -Breaking

© Reuters. FILE PHOTO – Workers build campers in the Knaus-Tabbert AG plant near Passau (Germany), March 16, 2021. Picture taken March 16, 2021. REUTERS/Andreas Gebert/File Photograph


LONDON, (Reuters) – Euro zone business activity accelerated in the last month. However, the rebound may not be permanent as demand growth slowed down and worries about Omicron coronavirus caused a drop in optimism.

Flash Composite Purchasing Managements’ Index (PMI) from IHS Markit, which is a useful indicator of economic health overall, rose to 55.4 in November, from 54.2 in Oct., below the earlier 55.8 flash estimate, but above the 50 threshold that separates growth and contraction.

Chris Williamson of IHS Markit, chief business economist said that an improvement in economic growth as indicated by the Euro Zone PMI is likely to last only a short time.

As pandemic fears intensified, demand for growth declined and firms’ hopes of future growth fell.

This is the lowest reading of April since April, when 55.1 was replaced by 54.7 in the new business index.

The final PMI was 55.9 for the bloc’s dominant service industry, which is still well above the initial estimate (56.6).

The business optimism index (which measures optimism for the coming year) fell to 66.7, from 69.0, its lowest point since February.

Europe faces another wave of coronavirus-related infections. The governments of Europe have tightened their gripes and on Monday, the World Health Organization declared that Omicron was at very high risk.

Williamson explained that sentiment over near-term prospects was likely to have fallen even more with the Omicron data.

Services have more impact than manufacturing, and Wednesday’s factory PMI showed that growth was slightly faster but supply chain bottlenecks were worsening. This has put a limit on production and driven up the price of raw materials at their highest rate for over 20 years.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.