Business activity in the eurozone continued to contract in November but the rate of decline has slowed, according to PMI data published on Wednesday by S&P Global.
The keenly watched output index rose from 47.3 in October to 47.8 in November, but remained under 50 -- signifying a contraction -- for the fifth month in a row.
Inflation remains high in almost all economies in the single currency bloc, but S&P said cost pressures on firms are now rising more slowly and business confidence, while still "gloomy", is up.
"A further fall in business activity in November adds to the chances of the eurozone economy slipping into recession," warned Chris Williamson, S&P's chief business economist.
"So far, the data for the fourth quarter are consistent with GDP contracting at a quarterly rate of just over 0.2 percent."
But he noted that "supply constraints are showing signs of easing, with supplier performance even improving in the region's manufacturing heartland of Germany."
Despite improved supplies to businesses, industrial giant Germany remains in the eurozone's steepest downturn, with a PMI of 46.4.
Fellow large economy France has been performing better but still fell into output contraction in November, the first drop in business activity since February 2021.
Jack Allen-Reynolds, senior economist at Capital Economics, said a tentative increase in manufacturing lay behind the better-than-expected figure.
"All told, these surveys suggest that the contraction in GDP in the fourth quarter might be a bit smaller than the decline of 0.5 percent quarter-on-quarter that we have pencilled in," he said.
"But they are still very weak and suggest that the region’s inflation problem is far from over."