Euro zone business grew at the slowest rate this year in September, reflecting falling demand in the region where new orders were the weakest in almost a year, surveys showed today.
Firms cut prices at a faster rate last month, underscoring the difficulty the European Central Bank is likely to have in bringing persistently low inflation back up, especially with weak demand for goods and services in a stagnating economy.
Indeed, inflation is at a five-year low of just 0.3 per cent and the bloc’s economy stagnated in the second quarter. Markit’s Composite Purchasing Managers’ Index, which is based on surveys of thousands of companies across the region and is seen as a good gauge of growth, fell to a ten-month low of 52.0, well below August’s 52.5.
That final reading was also weaker than a preliminary estimate of 52.3, although it was the 15th month above the 50 line that denotes growth. "The PMI suggests the euro zone economy remained stuck in a rut in the third quarter," said Chris Williamson, chief economist at Markit.
The composite output price PMI, which has been sub-50 since April 2012, fell to a 14-month low of 48.5 from August’s 48.9. The new orders sub-index, which measures demand, eased last month to the lowest in almost a year. “The waning of growth signaled by the PMI will apply further pressure on the ECB to broaden the scope of its planned asset purchases, to not only buy riskier asset-backed securities but to also start purchasing government debt,” added Mr Williamson. The central bank has launched a series of policies to boost the economy and inflation.
Yesterday, the central bank said it will buy bundles of loans and other forms of secured debt from mid-month in an attempt to kick start a languishing euro zone economy, despite misgivings in Germany and elsewhere.
An overall PMI for the dominant service industry fell to 52.4 from 53.1 in August, below the preliminary estimate of 52.8. Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.
Reuters
