The economic recovery outlook is bleak, and the Eurozone's manufacturing PMI remained weak in November

According to the Zhitong Finance APP, data released on Monday showed that the final value of the Eurozone's November SPGI Manufacturing PMI was 45.2, consistent with the preliminary value and down from October's 46, further distancing itself from the boom-bust line of 50. It is worth mentioning that this indicator has been below the boom-bust line since mid-2022.

As a result of this news, as of the time of writing, the euro fell 0.61% against the US dollar, trading at 1 euro to 1.051 dollars, having earlier dipped to 1 euro to 1.0496 dollars during the day.

The latest data indicates that manufacturing activity in the Eurozone significantly declined last month, and further weak demand may dampen hopes for an imminent recovery in the Eurozone economy, despite some signs of stabilization in October. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stated, "These numbers look terrible. The recession in Eurozone manufacturing seems never-ending. With new orders plummeting rapidly and at a fast pace, there are no signs of recovery in the short term." He added, "The economic downturn is widespread, affecting all three major economies in the Eurozone. Germany and France are in the worst situation, and Italy is not much better."

Although manufacturers have lowered prices, they are laying off workers at the fastest rate since the pandemic due to declining overall demand—an employment index fell from 46.2 to 45.2, the lowest level since August 2020. Demand from overseas—including trade between Eurozone countries—has also declined more rapidly and may worsen, as U.S. President-elect Trump plans to impose a 10% tariff on all imported goods, making European products more expensive and less competitive in the U.S. A survey of economists last month showed that the vast majority believe Trump's tariff policy will have a significant impact on the EU economy in the next two to three years.

The bleak economic outlook for the Eurozone may boost market expectations for a 50 basis point rate cut by the European Central Bank (ECB) this month. For example, JP Morgan has brought forward its forecast for an ECB rate cut to December this year, expecting a 50 basis point reduction. The institution pointed out that the continued slowdown in Eurozone economic activity is the main reason driving this decision. JP Morgan economist Greg Fuzesi stated, "Given the sharp decline in the PMI, weakening inflation momentum in the services sector, ongoing trade uncertainties, and current interest rates being in a tightening range, there is a strong case for a rate cut."

However, there are differing views among ECB policymakers. ECB Governing Council member Francois Villeroy de Galhau previously stated that the ECB should continue to cut rates, but the specific pace of easing will be determined in the coming months. Meanwhile, another member, Isabel Schnabel, expressed a more hawkish stance earlier last week, stating that borrowing costs are nearing levels that no longer suppress economic growth Despite differing opinions within the European Central Bank's Governing Council, Greg Fuzesi stated, "Even though the dynamics within the Council can sometimes lead to incomprehensible outcomes, the evolution of the data has made a 50 basis point rate cut in December very attractive."