Eu­ro­zone growth slows as trade wars bite

The Malta Business Weekly - - NEWS -

Eu­ro­zone cor­po­rate growth is stum­bling this month, as tar­iffs and trade wars hit eco­nomic de­mand.

Data firm Markit re­ports that busi­ness growth is the slow­est for over two years, while op­ti­mism has hit a four-year low in Oc­to­ber.

Firms re­ported a slow­down in ex­ports, par­tic­u­larly in man­u­fac­tur­ing, where new ex­port or­ders for goods de­creased for the first time since June 2013.

This has pulled Markit’s Flash Eu­ro­zone PMI Com­pos­ite Out­put In­dex down to 52.7, a 25 month low, down from 54.1 in Septem­ber. Any read­ing over 50 shows growth.

Ger­many, the eu­ro­zone’s largest econ­omy, was hit par­tic­u­larly hard. Fac­tory out­put rose by the small­est in al­most four years, while ser­vice sec­tor growth was the slow­est since May.

Chris Wil­liamson, chief busi­ness econ­o­mist at IHS Markit, says the eu­ro­zone ap­pears to be slow­ing as the eco­nomic out­look dark­ens.

“The pace of Eu­ro­zone eco­nomic growth slipped markedly lower in Oc­to­ber, with the PMI set­ting the scene for a dis­ap­point­ing end to the year. The sur­vey is in­dica­tive of GDP growth wan­ing to 0.3% in the fourth quar­ter, and for­ward-look­ing in­di­ca­tors, such as mea­sures of fu­ture ex­pec­ta­tions and new busi­ness in­flows, sug­gest fur­ther mo­men­tum could be lost in com­ing months.

“The slow­down is be­ing led by a drop in ex­ports, linked in turn by many sur­vey re­spon­dents to trade wars and tar­iffs, which ap­pears to have dark­ened the global eco­nomic en­vi­ron­ment and led to in­creased risk aver­sion. It is there­fore not sur­pris­ing to see the slow­down broad­en­ing out across the econ­omy, hit­ting the ser­vice sec­tor.”

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