Service sector declines, Eurozone faces risk of recession

DNVN - On December 4, the Eurozone economy continued to record a serious decline in November, as both the manufacturing and service sectors tended to shrink.

The Hamburg Chamber of Commerce Bank (HCOB) composite Purchasing Managers' Index (PMI) - published by S&P Global - fell to 48.3 from 50 in the previous month, hitting a 10-month low. A reading below 50 is generally seen as a sign of a decline in economic activity.

Notably, the services sector recorded its first contraction since January, with the PMI falling from 51.6 to 49.5. This reflected weak demand across the region, as new orders in the private sector continued to fall for the sixth consecutive month, the sharpest decline this year. Major economies such as Germany, France and Italy all recorded declines in business activity, with PMIs of 47.2, 45.9 and 47.7 respectively.

"Stagflation is a tough word to hear, especially for a central bank, but that's exactly what's happening in the eurozone right now," said Cyrus de la Rubia, an economist at HCOB, noting that the European Central Bank (ECB) is facing a difficult situation in needing to support the economy while inflation remains high.

The decline in the services sector, a key pillar of the Eurozone economy, is raising concerns about the overall growth outlook, especially in three key countries of the region. This is said to stem from political instability in Germany and France, which has reduced consumer confidence, along with fears of trade wars related to President-elect Donald Trump's new tax policies in the coming time.

In France, political uncertainty has hit the service sector, with the PMI falling from 49.2 in October to 46.9 in November, indicating a contraction in business activity. At the same time, business confidence in France has fallen to its lowest level in more than four years due to political concerns.

"The latest survey data continues to highlight the weakness of the Eurozone economy and brings risks to the modest economic recovery we do not expect until 2025," said Leo Barincou, senior economist at Oxford Economics.

Current developments are showing that the Eurozone is at risk of falling into recession, requiring timely interventions from the ECB and member states' governments to stabilize the situation and promote growth.

Ganoderma (t/h)

Source: https://doanhnghiepvn.vn/quoc-te/nganh-dich-vu-suy-giam-eurozone-doi-mat-nguy-co-suy-thoai-kinh-te/20241205085431473