© Reuters. FILE PHOTO: Buyers fill Cologne’s main shopping street Hohe Strasse (High Street) in Cologne, December 12, 2020. REUTERS / Wolfgang Rattay / File Photo
By Jonathan Cable
LONDON (Reuters) – Business growth in the euro zone unexpectedly accelerated this month, but another wave of coronavirus infections and new restrictions, as well as price pressures, should dampen expansion in December, a poll on Tuesday found.
IHS Markit’s Flash Composite Purchasing Managers’ Index, a good indicator of overall economic health, rose to 55.8 in November from 54.2 in October.
That beat all forecasts from a Reuters poll that predicted a drop to 53.2. Anything over 50 indicates growth.
“November’s flash PMIs surprised upside in the euro zone, France and Germany,” said Rory Fennessy of Oxford Economics.
“However, with cases soaring in some eurozone countries, the near-term outlook is quickly becoming more pessimistic as the risks of another dangerous coronavirus wave increase. The mood is likely to deteriorate in December. “
The growth in the German https://www.reuters.com/markets/europe/german-business-activity-picks-up-november-price-pressures-hit-record-high-pmi-2021-11-23 has increased slightly accelerated but persistent supply shortages in manufacturing continued to weigh on factory output and increased inflationary pressures to unprecedented highs, earlier data showed.
The French https://www.reuters.com/markets/europe/french-business-activity-stronger-than-forecast-nov-flash-pmi-2021-11-23 business activity also expanded faster than expected, initial estimates showed as the service sector of the second largest economy in the euro area saw the fastest growth in almost four years.
But European stocks https://www.reuters.com/article/instant-article/idUSL4N2SE1KI fell to a three-week low on Tuesday as the resurgence of COVID-19 cases and concerns about the rate hike weighed on sentiment.
The renomination of Federal Reserve Chairman Jerome Powell, https://www.reuters.com/markets/us/powell-tapped-second-term-fed-chair-2021-11-22 has put bets on US rate hikes in the 2022, while UK companies reported the strongest growth in new orders since June, alongside record cost pressures that may pave the way for a Bank of England rate hike in December.
The BoE https://www.reuters.com/world/uk/bank-england-be-first-major-bank-hike-rates-probably-december-economists-2021-11-12 will be the first major central bank Raising rates, but whether that first hike will happen next month or wait until the beginning of next year, divided economists who were asked by Reuters earlier this month.
Delivery bottlenecks caused by the pandemic have turned it into a seller’s market for raw materials and the composite input price index rose from 73.2 to 75.9, by far the highest since the survey began in mid-1998.
Still, the PMI for the bloc’s dominant service industry rose from 54.6 to 56.6, well above any predictions from a Reuters poll that predicted a decline to 53.5.
However, optimism faded as re-bans are likely to have a greater impact on the services. The business expectations index fell from 69.0 to 66.6, the lowest value since February.
Manufacturing activity remained robust and the factory PMI rose from 58.3 to 58.6. An index measurement output that feeds into the composite PMI has been increased from 53.3 to 53.8.
Demand remained strong and factories were able to pass some of the record increase in raw material costs on to customers. The producer price index jumped from 72.6 to 74.3, the highest since data collection by IHS Markit began 19 years ago.
“The polls show that price pressures remain high, with producer price PMIs for both manufacturing and services rising to their highest levels in nearly two decades, which we believe will remain high for a long time to come.” said Jessica Hinds of Capital Economics.
The PMIs cast some doubts on the European Central Bank’s claim that the rise in inflation is temporary. According to a Reuters poll, there is a risk that the eurozone’s inflation expectations will further exceed the bank’s 2% target next year. next year-2021-11-12 earlier this month.
ECB board member Isabel Schnabel https://www.reuters.com/article/ecb-policy-schnabel-idUSKBN2I80FM told Bloomberg in an interview with Bloomberg that inflation in the euro area next year would be higher than previously thought and it is Risk that price growth above this could remain the bank’s medium-term goal.