The latest data from S&P Global shows that the Composite Purchasing Managers’ Index (PMI) for the euro area stands at 52.4, nearly matching October’s 52.5 and remaining well above the 50 threshold that separates expansion from contraction.

Analysts had expected the reading to remain unchanged, reflecting steady private-sector activity across the region.

Service Sector Drives Growth

efanews.eu | Economist Cyrus de la Rubia expects faster Q4 Eurozone growth, driven by services over manufacturing.

Services in the euro area experienced their strongest month in a year and a half, offsetting weaker performance in manufacturing. Germany continued to play a leading role in the region’s economic expansion, despite its composite PMI of 52.1 falling short of forecasts. France, despite ongoing budget challenges, exceeded expectations with a reading just below 50, signaling stability in its private-sector activity.

Cyrus de la Rubia, an economist at Hamburg Commercial Bank, noted:

“The euro zone is more or less maintaining its relatively robust expansion rate. Although the manufacturing sector is dampening growth performance, the high weight of the service sector in the overall economy means that the euro zone as a whole should grow faster in the final quarter than in the third.”

This highlights the importance of services in driving overall economic momentum, even when industrial output underperforms.

Economic Outlook and Investment Trends

Europe’s economy has performed better than anticipated despite global trade tensions. Analysts expect the region to nearly sustain this year’s growth rate in 2026 as new investments in infrastructure and defense projects begin to take effect. However, the headline PMI numbers mask disparities among the 20 euro-area members, with about half of the bloc showing no growth in the third quarter.

For monetary policy, current conditions do not justify additional interest rate cuts. The European Central Bank has reduced rates from a peak of 4%, bringing inflation close to its 2% target. Officials expect inflation to remain near this level in the near term.

De la Rubia also highlighted recent survey findings:

“November’s surveys show faster cost inflation in the closely watched services industry is being tempered by a slowdown in the pace of sales-price increases. On balance, the headaches for monetary policymakers, who are paying particular attention to the rate of inflation among service providers, should be limited. We expect interest rates to remain unchanged in December.”

Importance of PMIs

Freepik | Strong service sectors in Germany and France are steadily driving the Eurozone’s private sector growth

PMIs are closely followed by markets because they provide early insights into economic trends and potential turning points. While they measure the breadth of changes in output rather than their depth, they are valuable tools for assessing the general direction of the economy.

Looking ahead, data scheduled for release later this week is expected to show the UK and US composite PMIs remaining well above 50, indicating sustained private-sector expansion in both regions.

Looking Ahead

The euro area’s private sector continues to expand steadily, driven by strong service sector performance and resilient economic activity in key countries, such as Germany and France. Manufacturing weaknesses are present, but they are outweighed by growth in services, which supports overall economic momentum.

With inflation near target levels and interest rates expected to remain stable, the euro-area economy looks set to maintain its growth trajectory into the coming quarters.