Eurozone business activity slows again

Business actitivity in the 17-nation eurozone slowed again in November, adding to concerns that overall growth is softening as the bloc struggles out of recession, a key survey showed on Thursday. Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for November fell to 51.5 points from 51.9 points in October, hitting a three-month low, Although November output remained above the 50-points line indicating growth or contraction, this was the second month running for which the closely-watched leading indicator had fallen, after October's reading slipped to 51.9 points from 52.2 in September. But activity in the French economy, the second-biggest in the eurozone, shrank in November for the first time for three months, the Markit indicator showed. Recent reports from the European Commission, the Organisation for Economic Cooperation and Development and the Standard and Poor's rating agency have expressed strong concerns about proespects for the French economy. Recent data put eurozone economic growth at 0.2 percent in the third quarter, down from 0.3 percent in the second when the single currency bloc finally escaped a record 18-month recession. The November PMI report confirms continued weakness in an economy desperate for growth to mend some of the debt crisis damage, especially record unemployment running at more than 12 percent. Markit said that other PMI measures reflected similar softness but manufacturing, a relatively small part of the wider economy, held its own. The Eurozone Services PMI for November fell to 50.9 points from 51.6 in October while the Eurozone Manufacturing PMI edged up to 51.5 from 51.3. Chris Williamson, Markit chief economist, said that while it was welcome that the PMI report remained in positive territory for a fifth month in November, "it looks like momentum is being lost again." The figures thus far suggest that the economy will chalk up "a very modest 0.2 percent expansion" for the fourth quarter, Williamson said in a statement. The November downturn also shows that the European Central Bank was right to cut interest rates to a record low level at its last meeting given the risk of another recession, he said. "The further loss of growth momentum will raise calls for policymakers to do more to prevent the eurozone from slipping back into another recession. “Attention will also be focused on the signs that deflationary forces may be gathering," Williamson added, highlighting a growing concern that prices might actually begin to fall in real terms and so risk setting off a downward spiral. Williamson noted that powerhouse Germany once again saved the day while France "showed further signs of being the ‘sick man of Europe’ with output showing a renewed decline and raising the risk (it) could fall again in the fourth quarter, constituting a renewed recession." Growth outside the eurozone's two biggest economies meanwhile "slowed to near-stagnation," he said.