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Eurozone private sector conditions improve after six-month low in October: economic close

Growth in euro area business activity picked up in November, following its six-month low the previous month, IHS Markit revealed.

The composite index of purchasing managers in the area reached 55.8 in November, against 54.2 in October, according to flash estimates from the London firm.

However, high inflation in the region remained a problem as costs and average selling prices rose at record rates.

Although confidence about the outlook fell to its lowest level in 10 months – in part due to a resumption in concerns over Covid-19 – businesses faced stronger demand in November, raising the rate job creation at its second highest level in 21 years.

The service sector outperformed manufacturing, with growth peaking in three months. The manufacturing sector also rebounded in November, despite expanding to the second lowest level in the previous 17 months.

The consumer confidence index fell significantly in the EU and the euro area in November, falling 2.1% and 2.0% respectively compared to October.

The indicator reached -8.2 for the EU and -6.8 for the euro area, the European Commission said.

The index fell below the pre-pandemic level for the EU while it was close to that level for the euro area. However, he remained above his long run average.

UK private sector

The UK’s composite PMI index fell to 57.7 in November from 57.8 the month before, according to flash estimates from IHS Markit.

Like the eurozone, the service sector outperformed manufacturing as customer demand accelerated and pandemic restrictions were relaxed. The manufacturing sector also grew to its highest level in three months.

On the flip side, input cost inflation hit record highs in November due to wage hikes and rising costs for energy, fuel and raw materials.

Meanwhile, employment levels saw some improvement as customer demand and larger backlogs drove the increase.

In addition, new order intake reached its highest levels since June, while exports increased only slightly.

Australian economy

Growth in Australia’s private sector increased in November on better conditions in the service and manufacturing sectors, according to IHS Markit’s quick estimates.

The composite PMI for the country hit an initial reading of 55 in November, a five-month high and up from 52.1 the previous month. Growth in production and demand in the private sector increased in November as restrictions induced by Covid-19 eased. Business confidence and employment conditions have also improved.

Supply chain disruptions remained a problem in the private sector. This, along with transportation and labor issues, caused higher prices.

In another economic development for Australia, the country’s central bank said it would take a close look at asset prices to check for any bubbles as interest rates hit record highs, reported Bloomberg.

Favorable emerging debt securities

The rise in interest rates triggered by central banks in emerging markets means their debt will be more attractive to investors, according to private equity giant BlackRock.

It will also provide a buffer should US Federal Reserve policy tighten.

“We prefer local currency bonds from high yielding countries with strong current account balances,” said Wei Li, chief global investment strategist at BlackRock, Wei Li.

However, this could negatively affect stocks and stocks in those countries, the company added.

Core inflation in Singapore

Singapore’s core inflation rate, which excludes changes in food and energy prices, rose to 1.5% in October, posting the highest jump in nearly 3 years, revealed the Singapore Monetary Authority.

This builds on the previous month’s inflation of 1.2 percent.

This is explained by the rise in the prices of services and food, which have increased annually by 1.6 and 1.7 percent respectively.

In addition, consumer prices as a whole rose at an annual rate of 3.2% in October, against 2.5% in September.

Poland’s interest rates

According to Bloomberg, Poland’s central bank is expected to raise interest rates to pre-pandemic levels. This comes at a time when inflationary pressures in the country are intensifying.


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