Eurozone business activity continued to expand steadily in November 2025, with the services sector driving growth while manufacturing returned to contraction, according to the latest PMI data from S&P Global. The 20-nation bloc has demonstrated resilience despite ongoing global economic uncertainty, and improving business sentiment suggests that the region’s economic momentum may persist heading into 2026.

Eurozone Composite PMI Highlights

The HCOB Flash Eurozone Composite PMI slightly decreased to 52.4 in November from a more-than two-year high of 52.5 in October, marginally below the Reuters poll forecast of 52.5. This marks the 11th consecutive month above the 50-point threshold, indicating continued expansion in overall private sector activity.

Key points:

• Services PMI: Rose to 53.1 from 53.0 in October, reaching its highest level since May 2024, outperforming the Reuters poll forecast of 52.8.
• Manufacturing PMI: Fell to 49.7 from 50.0, returning to contraction territory due to weaker demand, below the expected 50.2. Factory job cuts accelerated at the fastest pace in seven months.

Bert Colijn of ING noted, “Business sentiment has undoubtedly turned more optimistic over the course of the year. While global headwinds persist, the eurozone has avoided a recession so far, and activity is expected to strengthen further in 2026, though cautiously.”

Country-Level Performance

• Germany: The eurozone’s largest economy saw a slowdown in private sector growth, with manufacturing contracting unexpectedly and service sector expansion slightly weaker than anticipated.
• France: Business activity almost stabilized as robust growth in services nearly offset a sharper-than-expected decline in manufacturing output.
• United Kingdom (outside EU): Business growth nearly stalled in November, as companies postponed investment and hiring decisions ahead of the upcoming government budget announcement.

Inflation and Input Costs

Overall input costs in the eurozone rose at the fastest rate since March 2025, although companies largely absorbed the increases. Meanwhile, output prices grew at the slowest pace in over a year, keeping overall inflation close to the European Central Bank’s 2% target. This steady inflation outlook, coupled with moderate economic expansion, is widely expected to keep key ECB interest rates on hold for the foreseeable future.

Outlook for the Eurozone Economy

Despite challenges in the manufacturing sector, the eurozone’s economy remains resilient, with services acting as a stabilizing factor. Analysts expect steady private sector expansion to continue into 2026, supported by improving business confidence and moderate inflationary pressures.

Key Takeaways

• Eurozone business activity grew steadily in November, driven primarily by the services sector.
• Manufacturing activity contracted due to weak demand, marking the sector’s first decline in several months.
• Germany’s growth slowed, France’s activity stabilized, and the UK saw business expansion nearly halt.
• Input costs rose quickly, but inflation remained near the ECB’s 2% target, supporting a stable monetary policy outlook.
• Overall economic momentum suggests moderate growth is likely to continue into 2026.