Eurozone business growth hits four-year low, Markit estimate

Slowdown in exports spread to the service sector

BRUSSELS, Nov 24, (AFP): Business growth in the 19-nation eurozone pulled back in November to its slowest rate in nearly four years, as exports weakened, a closely watched survey showed Friday.

In a first estimate, data monitoring company IHS Markit said a slowdown in exports has spread to the service sector, with companies downbeat on future growth.

Markit said demand had “weakened in the face of headwinds such as rising political uncertainty, tighter financial conditions and higher prices.”

The IHS Markit purchasing managers’ index (PMI) fell to 52.4 points in November from 53.1 in October, lower than a forecast of 53.0 points made by analysts surveyed by data firm Factset.

A figure greater than 50 indicates a growing economy.

“Manufacturing remains the main area of weakness, linked in part to having been hit hard once again by deteriorating exports,” said Chris Williamson, Markit’s chief economist.

“The slowdown is also being temporarily exacerbated by persistent disappointing car sales,” he said.

The data indicates that gross domestic product (GDP) growth will hit a feeble 0.3 percent in the eurozone in the final quarter of this year.

Analyst Jack Allen at Capital Economics said it remains unlikely that the European Central Bank will change its strategy – the gradual withdrawal of its extensive support to the economy.

A week ago, ECB President Mario Draghi reaffirmed the decision taken in October to stop buying debt on the market at the end of December.

Otherwise known as “QE” or quantitative easing, the policy has been the ECB’s major anti-crisis measure since 2015, and has helped lower borrowing rates throughout the eurozone.

Meanwhile German growth in 2019 could be even lower than 1.5 percent, the head of the BDA employers association President Ingo Kramer said at a conference in Berlin on Thursday.

Europe’s largest economy contracted by 0.2 percent in the July-September period as global trade disputes and problems in the auto sector threw the traditional export growth engine into reverse, raising concerns that a long expansion is faltering.