FILE PHOTO: Solinotes perfume bottles are filled on the production line at the Corania factory, in Les Pennes-Mirabeau, near Marseille, France, August 1, 2025. REUTERS/Manon Cruz/File Photo

Dec 3 (Reuters) - Business activity in the euro zone expanded at its fastest pace in two-and-a-half years in November as a robust service sector more than offset manufacturing weakness, a survey showed on Wednesday.

HCOB's Eurozone Composite Purchasing Managers' Index (PMI), compiled by S&P Global and seen as a good gauge of overall economic health, rose to 52.8 in November from 52.5 in October, marking its sixth consecutive monthly increase.

PMI readings above 50.0 indicate growth in activity, while those below that level point to a contraction.

"The service sector in the euro zone is showing clear signs of recovery," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"The strong performance in the service sector was even enough to more than offset the weakness in the manufacturing sector, meaning that economic output in the euro zone grew slightly faster in November than in the previous month," de la Rubia added.

The services PMI climbed to 53.6 last month from 53.0 in October, reaching its highest level since May 2023 as new business volumes grew at the strongest pace in 18 months.

Most countries surveyed recorded expansions, with Ireland leading the way as its growth rate hit a three-and-a-half-year high. Spain maintained robust growth despite slowing from October, while Italy posted its strongest expansion since April 2023.

In France, private business activity expanded for the first time in 15 months, while activity moderated in Germany from October's 29-month peak.

Manufacturing showed signs of struggling, however, with factory production growth slowing to a nine-month low and new orders declining marginally.

Employment across the euro zone continued to increase in November, though the pace of job creation slowed to only a fractional rate. The services sector maintained hiring momentum, while manufacturing firms reduced staff at the sharpest rate since April.

Business confidence improved slightly but remained below its long-run average, suggesting companies remain cautious about future conditions.

On the inflation front, input costs rose at the fastest pace in eight months, driven by renewed increases in manufacturers' purchasing costs and accelerating service sector expenses.

However, the prices firms charged customers rose at a softer pace, with output price inflation easing to a six-month low.

"The inflation rate in the service sector, which the European Central Bank is monitoring with particular attention, has weakened significantly again in terms of sales prices," de la Rubia said.

"All in all, the ECB is likely to feel supported in its clearly communicated line of leaving interest rates unchanged at the upcoming central bank meeting."

(Reporting by Hari Kishan; Editing by Joe Bavier)