The euro area private sector expanded at the fastest pace in four-and-a-half years in November, underpinned by continued improvement in services. Germany grew at the fastest pace in three months, while France experienced a slowdown in growth. The composite output index rose to a 54-month high of 54.4 in November from 53.9 in October.
The recovery continued to be driven by the service sector, where business activity and new business grew at the fastest pace since May 2011. Moreover, employment showed the biggest monthly gain for five years. The services purchasing managers’ index increased to 54.6 from 54.1 in the previous month. The manufacturing PMI climbed to 52.8 from 52.3 in the previous month. The reading reached a 19-month high.
The data are signalling GDP growth of 0.4 per cent for the fourth quarter, barring a major downturn in global growth. The slightly improved PMI reading will no doubt do little to dissuade European Central Bank policymakers that more needs to be done at their December meeting to ensure stronger and more sustainable growth.
Meanwhile, UK Chancellor of the Exchequer George Osborne said the UK economy is set to grow faster than earlier expected in the next two years as investments are projected to improve. Based on forecasts from the Office for Budget Responsibility, the economy is set to expand 2.4 per cent next year, Osborne said in his spending review and autumn statement speech. This was higher than the 2.3 per cent growth predicted in July.
For 2017, the growth forecast was lifted to 2.5 per cent from 2.4 per cent. In the long term, growth was forecast at 2.4 per cent in 2018 and 2.3 per cent in 2019 and 2020. The growth projection for this year was retained at 2.4 per cent.
In the US, economic activity increased by more than previously estimated in the third quarter. Real GDP climbed by 2.1 per cent in the third quarter compared to the previously reported 1.5 per cent increase. The stronger than previously estimated growth primarily reflected an upward revision to private inventory investment.
However, the upward revision to GDP growth was partly offset by downward revisions to consumer spending and exports. The stronger than previously estimated GDP growth still reflects a slowdown compared to the 3.9 per cent jump seen in the second quarter.
This report was compiled by Bank of Valletta plc for general information purposes only.