US business activity weakens further; eurozone downturn eases slightly

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Activity is slumping under the weight of the Federal Reserve's most aggressive interest rate-hiking cycle since the 1980s.

The flash composite new orders index dropped to 46.4, the lowest level in two and half years, from a final reading of 49.2 in October. Outside the initial wave of the COVID-19 pandemic, this was the worst reading since 2009.

Meanwhile, the downturn in eurozone business activity eased slightly in November, offering a glimmer of hope the expected recession there may be shallower than feared, but consumers still cut spending amid a cost-of-living crisis. However, November is the fifth month the index has been below the 50 mark separating growth from contraction.

But in France, activity contracted for the first time since February 2021 as lower new orders weighed on the eurozone’s second biggest economy. Businesses were also raising prices for their products at the slowest pace in just over two years, in part because of ebbing demand. In the eurozone, there was a similar trend. New orders fell sharply again and there was a marked drop in price pressures with the output prices index falling to 63.7 from 66.1, its lowest reading since March 2021., more than five times the European Central Bank’s 2% target, and the ECB is expected to add another 50 basis points to its deposit rate next month so any sign of an easing in price pressures will be welcomed by policymakers.

 

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European shares hold near 3-month highs as business activity slowdown easesEuropean stocks were pinned near three-month highs as data showed a downturn in euro zone business activity eased slightly in November while rallying commodity shares offset losses in Credit Suisse following its profit warning. | Reuters
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