Eurozone business activity tanks in November: survey

(BRUSSELS) - Business activity in the 15 nations sharing the euro slumped in November at the fastest pace on record as a severe downturn deepened, according to a widely watched survey on Friday.

The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, dropped to 39.7 points in November from 43.6 in October, according to an initial estimate.

The figure, which marked the biggest drop on record and brought the index to its lowest level in the survey's 10-year history, fell far short of economists' estimates for 42.8.

"The eurozone flash PMI surveys continued to tumble in November, suggesting that the economic downturn has gathered pace in fourth quarter," said Ben May at consultants Capital Economics.

Markit said that the index's fall marked the sixth consecutive month of contraction in private sector output, which is indicated by a reading of less than 50 points.

The index for activity in the eurozone's vast services sector also retreated, falling to 43.3 points from 45.8 in October, while manufacturing activity plunged to 33.1 from 39.8 in October.

"The eurozone economy is going from bad to worse," said economist Howard Archer with consultants Global Insight.

"The 'flash' November eurozone service sector and manufacturing purchasing managers' surveys (heightens) concern that the eurozone's recession is deepening," he added.

The eurozone officially entered its first recession since the bloc was formed in the the third-quarter with two consecutive quarters of contraction.

Economist Marco Valli at Italian bank Unicredit said the PMI surveys suggested that the eurozone economy would contract a further 0.4 percent this quarter and that the European Central Bank should serve up deep interest rate cuts.

"We have no doubt that the current exceptional circumstances require a bold ECB move next month, probably twice the 50 basis point (half a percentage point) cut we have penciled in," he said.

"However, as appears clear from recent rhetoric, many at the ECB still think that large rate cuts can be counterproductive, and we are not sure today's data have the potential to make them change their mind," he added.

The ECB's main lending rate currently stands at 3.25 percent. The bank cut the rate by 50 basis points in a joint move with other central banks on October 8 and then by another 50 points on November 6.