Eurozone PMI falls in November

Erste Bank Research Team Erste Bank

On the radar

In Romania, the first round of presidential elections took place over the weekend. Far-right Russia-friendly candidate Georgescu won. Reformist candidate Lasconi likely made it to the run-off.
Today, Poland will release set of data at 10 AM CET that is October’s industrial output growth, producer prices, employment and wage growth.
At 10.30 AM CET Slovenia will publish unemployment rate for the third quarter.
At noon CET real wage growth for September will be released.

Economic developments

In November, the eurozone's flash composite PMI index fell deeper into recession territory with the value dropping 1.9 points to reach 48.1 points compared to the previous month. This marked a significant drop and indicated that the euro area economy slipped into contraction in the fourth quarter. Moreover, the significant slowdown in economic activity is evidenced by decline in orders and underperformance of manufacturing sector. Further, for the first time since January this year, the flash PMI index for the service sector has entered the recession zone. Sentiment in France deteriorated visibly due to the contraction in economic activity in services, but also due to pessimistic expectations. In contrast, outlook in Germany has improved slightly, most importantly flash PMI index in the manufacturing sector climbed slightly up in November. The current uncertainty related to the geopolitical tensions has strongly impacted expectations, as the possibility of trade wars has increased since the US presidential elections. The political situation in Germany has been complex as well, adding to the high level of uncertainty. All in all, the external environment is the source of the downside risks to our current growth forecasts.

Market developments

In Romania, it seems, that a far-right and pro-Russia candidate Georgescu won the first round of presidential election and pro-European candidate anti-corruption Elena Lasconi likely came in second with votes still counting. Such a strong result of Georgescu came as a surprise. The second round of the presidential election will take place in two weeks, on December 8. In the meantime, Romania will hold parliamentary elections.

In Poland, Marta Kightley, the National Bank of Poland’s deputy governor suggested that monetary easing is likely to start in March 2025 as the extension of the price cap on household power prices should contain inflation in the first quarter and allow it to fall within tolerance band in the second half of 2025. EURCZK opens the week at 25.33, EURHUF is at 411 and EURPLN at 4.33. The long-term yields moved down over the course of last week, most notably in Hungary and Poland.

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Erste Bank Research Team

Erste Bank

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