Eurozone businesses hit the brakes in October
Eurozone business growth lost far more momentum than expected as it entered the final quarter of 2018, dragged down by waning orders that put a big dent in confidence, a survey showed.
October’s disappointing survey is likely to concern policymakers at the European Central Bank, RTE wrote.
They are expected to end their bondbuying program in less than three months — despite a cocktail of political and trade concerns.
The slowdown comes amid an escalating trade war between the US and China, a spiraling debt dispute in Italy and the prospect of tightening financial conditions.
“There is a broadening spread of factors which are dampening demand. The trade wars and tariffs are the most widely cited worry,” said Chris Williamson, chief business economist at survey compiler IHS Markit.
Indeed, the outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists, who are also concerned about the Us-china trade war and have repeatedly said the eurozone economy is well past its peak.
IHS Markit’s Flash Composite Purchasing Managers’ Index tumbled to a 25-month low of 52.7 from a final September reading of 54.1, significantly below the expectation in a Reuters poll for a modest dip to 53.9. The lowest forecast was for 53.2. Anything above 50 in the survey, which is regarded as a good guide to economic health, indicates growth.
Suggesting firms do not expect a rebound anytime soon, the future output index, which gauges optimism, fell from 62.1 to a near four-year low of 59.4.
A similar reading from manufacturers fell to a level not seen in almost six years.
Williamson said if these PMI levels were maintained they pointed to fourth quarter growth of 0.3 percent, below the 0.4 percent predicted in a Reuters poll earlier this month.
Markets have taken a battering recently and European stocks were near a twoyear low yesterday, down 20 percent from their peak.
Manufacturers suffered a similar fate with their PMI sinking to 52.1 from 53.2, missing a median prediction for 53, as factory orders contracted for the first time since late-2014. The sub-index fell to 49.8 from 51.5.
An index measuring output, which feeds into the composite PMI, dropped to 51.2 from 52.7. It hasn’t been lower since the end of 2014.
It was a similar gloomier picture emerging for the bloc’s dominant service industry.
The services PMI plummeted to a twoyear low of 53.3 from September’s 54.7, also far short of all forecasts in a Reuters poll where the median was 54.5.
In a further sign of a dimming outlook, the services employment index — a lagging indicator — fell to 54.7 from 55.5.
“Companies are reining in their expansion plans, certainly their hiring. It does seem we are well and truly past the peak of the cycle, more uncertainty is creeping in,” Williamson said.