Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Euro zone business activity contracted sharply this month as renewed lockdowns forced many firms in the bloc’s dominant service industry to close temporarily, although news of possible vaccines boosted hopes for 2021, surveys showed on Monday.

The bloc’s economy is on track for its first double-dip recession in nearly a decade as a second wave of the coronavirus sweeps across Europe, a Reuters poll suggested last week. But on Monday, Britain’s AstraZeneca said its vaccine could be around 90% effective without any serious side effects.

Pfizer and Moderna have also developed apparently effective vaccines and Monday’s Purchasing Managers’ Index (PMI) showed optimism about the year ahead improving to its highest since before the pandemic hit the continent.

Story continues below advertisement

Still, IHS Markit’s headline flash composite PMI, seen as a good guide to economic health, fell to 45.1 in November from October’s 50.0 - the level separating growth from contraction. A Reuters poll had predicted a shallower dip to 46.1.

“The drop in the composite PMI to well below 50 adds to the evidence that the euro zone economy will post another sizeable contraction in Q4,” said Jack Allen-Reynolds at Capital Economics.

“But with vaccines looking increasingly likely to be rolled out in the first half of next year, the surveys show greater optimism about 2021.”

Vaccine hopes, and expectations of more stimulus from the European Central Bank next month, meant optimism improved. The composite future output index jumped to 60.1 from 56.5, its highest since February.

Shares and oil prices rose on Monday while the dollar softened.

FACTORIES TO THE RESCUE

Services activity in Germany, Europe’s largest economy, contracted faster this month after lockdown measures were introduced while in France the economy shrank at the fastest pace since May, sister surveys showed.

In Britain, which is outside the euro zone and European Union and has suffered the highest COVID-19 death toll in Europe, a new wave of coronavirus restrictions hammered the huge services sector.

Story continues below advertisement

A PMI covering the euro zone’s service industry fell to 41.3 from 46.9, its weakest reading since the height of the first wave of the pandemic and well below the 42.5 predicted in a Reuters poll.

With demand drying up despite price cuts and backlogs of work being run down, firms reduced headcount for a ninth month in succession. The services employment index fell to 48.1 from 48.5.

However, manufacturing has fared better as many factories have remained open. Its flash PMI held well above the breakeven mark at 53.6 in November, albeit below October’s 54.8. The Reuters poll had predicted 53.1.

An index measuring output, which feeds into the composite PMI, fell to 55.5 from 58.4. Demand also eased - the new orders index sank to 54.0 from 58.7 - indicating that the downward trend may continue.

“The good news is that the fall was cushioned by a strong manufacturing sector. Buoyed by Germany, the manufacturing PMI merely indicated a slowing of output growth, but not contraction,” said Bert Colijn at ING.

“Still, as the second part of the W-shape has just started, a long and uncertain road to recovery remains ahead.”

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies