LONDON (Reuters) – The slowdown in euro zone activity eased in November, but the private sector remains in contraction territory, suggesting the bloc’s economy will contract again this quarter as consumers are limiting their spending, according to the S&P Global business survey published Thursday.

Over the past quarter, the economy contracted by 0.1%, according to Eurostat, and the composite PMI indicates that the bloc could see a further contraction in the fourth quarter.

The index rose to 47.1 from 46.5 in October, its lowest level in almost three years, below the 50 threshold that separates growth and contraction.

A Reuters poll forecast a more modest rise to 46.9.

“The euro zone economy is mired. According to our models, these new figures make possible a second consecutive quarter of GDP contraction,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

The services PMI rose to 48.2 from 47.8 this month, compared with an estimate of 48.1, according to a Reuters poll.

Demand fell for the fifth consecutive month, although at a slower pace than in October. The new orders index rose from 45.6 to 46.7.

Manufacturing activity, which has contracted every month since July 2022, fell again in November. The sector PMI rose from 43.1 to 43.8, compared to a consensus of 43.4.

The index measuring production reached its highest level in six months, at 44.3 from 43.1.

With demand falling, factories reduced their purchases of raw materials, with orders to fulfill representing the bulk of activity. The backorder index stood at 40.1, up from 38.4, but its eighteenth consecutive month below 50.

Businesses reduced their workforces for the first time since January 2021. The composite employment PMI fell from 50.0 to 49.4.

(Report Jonathan Cable; Corentin Chappron, edited by Blandine Hénault)

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