Eurozone growth slows as trade wars bite
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.”