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Eurozone November PMI data signals 0.8% GDP growth in Q4, IHS says

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Eurozone November PMI data signals 0.8% GDP growth in Q4, IHS says

Eurozone business activity gathered pace in November as output growth accelerated to the fastest in more than 6.5 years, final purchasing managers' indexes from IHS Markit showed.

The final composite output index was confirmed at 57.5 in November after 56.0 in October as manufacturing PMI hit a 17-year high. The services business activity index was confirmed to have expanded for the 52nd straight month to 56.2 in November from 55.0 in the month before, on the back of six-month-high growth rate in new orders and a more than 10-year-high employment growth.

Overall new orders in the bloc gained at the fastest pace since February 2011, propelling overall job creation to a 17-year high. However, both input and output price inflation were at or near 6.5-year highs, the survey report noted.

"The survey data for the fourth quarter so far are consistent with the eurozone expanding by 0.8%, with growth rates of 0.9% and 0.7% signaled for Germany and France respectively," said Chris Williamson, chief business economist at IHS Markit.

"If survey data remain buoyant in December, expect to see 2018 growth forecasts revised higher."

November's composite PMI for Germany at 57.3, revised down from a flash 57.6 estimate, was still a two-month high. The figure was up from 56.6 in the month before, on the back of manufacturing sector PMI, which touched the second-highest ever recorded at 62.5.

German services PMI slipped to a three-month low of 54.3 in November from a 54.9 flash figure and from 54.7 in October. New business continued to show strong growth, although the rate eased from the 20-month high in the previous month.

The rate of job creation rose also slipped month over month while output price inflation was among the fastest recorded for nine years as input costs surged and demand rose. The month also saw a further weakening of service firms' confidence in business activity for the year ahead, to the second-lowest level year-to-date.

The French composite output index hit a 6.5-year high at 60.3 in November, up from the flash 60.1 estimate and October's 57.4 figure, as manufacturing climbed to a seven-year high at 57.7.

Robust client demand and good economic conditions pushed the country's service sector expansion to one of the fastest rates since May 2011 in November as the PMI came in at 60.4 after 57.3 in October. Rising demand propelled new service business to the greatest extent in almost seven years and employment reached a 16.5-year high.

However, input price inflation also increased to a six-year high and selling prices rose for the third straight month. Positive sentiment edged up from October's nine-month low amid expectations of strong client demand.

The Italian service sector growth also picked up in November as headline PMI rose to a three-month high of 54.7 from 52.1 in October. New work made similar gains to a three-month high on increasing demand and reportedly due to higher sales driven by competitive pricing plans. Nearly 44% of panelists signaled positive projections for growth in the coming 12 months.

France stayed at the top of the output growth rankings in November, followed by Ireland at a three-month high PMI of 57.5.