- Markit says deflation pressures remain: output prices drop
- Germany's composite PMI advances to three-month high
Economic activity in the euro area hit a 4 1/2-year high this month, according to a new report that also pointed to weak price pressures.
A composite index of services and manufacturing rose to 54.4 from 53.9 in October, London-based Markit Economics said on Monday. That’s the highest reading since May 2011. The individual readings for both industries climbed, defying economists’ expectations for no change. Levels above 50 signify expansion.
The survey points to continued growth in the 19-nation euro area, where European Central Bank President Mario Draghi has said more stimulus may be needed to revive inflation. Still, there’s little comfort from Markit on that aspect of the economy, with the latest report showing output prices fell for a ninth month this year.
“The central bank remains disappointed with the strength of the upturn at this stage of the recovery,” said Chris Williamson, chief economist at Markit. “November’s slightly improved PMI reading will no doubt do little to dissuade policy makers that more needs to be done.”
The euro weakened to a seven-month low after futures traders added to bearish bets and Draghi comments on Friday encouraged speculation his board will ease policy next week. It was down 0.1 percent at $1.0635 as of 10:48 a.m. Frankfurt time.
Markit said its report showed “ongoing deflationary pressures” in the euro region. Average input costs barely rose, linked primarily to falling global commodity prices.
“This upbeat survey about the European economy fell short on one important aspect though: inflation,” said Bert Colijn, an economist at ING in Amsterdam. “It is unlikely that the optimism from this survey will lead to less stimulus at their December meeting.”
In Germany, the euro-area’s largest economy, Markit’s composite index of activity rose to 54.9 in November, the highest since August, from 54.2. France’s gauge slipped to 51.3 from 52.6. Services growth cooled, with hotels and restaurants reporting a negative impact from the terrorist attacks in Paris.