According to data from S&P Global released last week, business activity in the Eurozone is declining for the second consecutive month. The composite PMI index stands at 49.7, remaining below the 50-point mark that signals economic contraction. The services sector has slowed to an eight-month low of 51.2, while manufacturing remains in negative territory at 45.9.

XPBEE analysts note that the most significant contraction this year has been in exports, attributed to trade tensions between the EU and China as both compete for dominance in the automotive industry. Beijing has urged Chinese car manufacturers to reconsider expansion plans in Europe due to potential import tariffs on electric vehicles, which could reach 45%.
Germany and France are primarily responsible for the EU’s economic slowdown. Germany’s manufacturing sector is teetering on the edge of stagnation, with its automotive and industrial sectors struggling against declining demand. Meanwhile, France faces a “sharp and accelerated” drop in demand, with its composite PMI falling to a nine-month low of 47.3.

The ongoing decline in regional activity may prompt the European Central Bank (ECB) to consider further easing of monetary policy. A decision is expected at the next meeting on 12 December. ECB President Christine Lagarde has already indicated a willingness to continue lowering the euro’s interest rate. However, opinions among officials vary, leaving open the question of whether the next move will be a 25-basis-point cut or a more aggressive 50-basis-point reduction.

In the US, the outlook is more optimistic. S&P Global reported that “business activity continued to grow at encouragingly high rates in October, supporting an economic expansion observed from early this year through Q4.” S&P Global data shows the services PMI increased to 55.3, and the manufacturing sector rose to 47.8. The positive momentum is also supported by the labour market, with unemployment benefit claims falling to 227,000—better than the forecasted 243,000.