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Eurozone service economy slows in November: Markit

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Eurozone service economy slows in November: Markit

Growth in the Eurozone service economy hit a four-month low in November, as the region’s largest member states continued to face strong headwinds.

Markit Group’s gauge of service activity in the Eurozone fell from 51.6 to 51.2 in November. The fall was softer than forecasted, as growth in Germany outweighed contraction in France and Italy. A PMI reading above 50.0 signifies growth, whereas a reading below that threshold indicates contraction.

Output in Germany’s service economy reached a ten-month high, with the November gauge rising 2.8 percentage points to 55.7. New business growth increased at the fastest pace since June 2011, helping to push business optimism to the highest level since March. Employment levels rose at the fastest rate since December 2011, erasing the previous month’s fractional decline.

Elsewhere in the euro region, Spain experienced the sharpest rate of service expansion in more than three years. Service activity in France and Italy fell back into contraction. France’s index of all-sector output growth fell to 48.0, a five month low. Spain’s all-sector index also reached a five-month low of 48.8.

“The euro area’s recovery lost some momentum in November,” said Chris Williamson of Markit. “The region’s economy is on course to grow by just 0.2 percent in the fourth quarter.”

While there are encouraging signs from Germany and Ireland, “declines in the PMIs for Italy and France raise the prospect of these countries’ economies contracting again in the fourth quarter” Williamson added.

The European Union’s second estimate for third quarter GDP growth was consistent with the initial estimate, which showed the euro area economy expanded 0.1 percent last quarter and at an annualized rate of -0.4 percent. The Organisation for Economic Cooperation and Development believes the struggling currency region will return to growth in 2014, according to a revised estimate.

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