Eurozone economy ‘close to stalling’

BRUSSELS: Brexit and trade war fears drove eurozone business growth to its lowest level in six years in September, a closely watched survey said yesterday, warning that the single currency area’s economy was “close to stalling”.

Deepening problems in the manufacturing sector led the downturn, with output falling at the quickest rate since 2012, but there was also bad news in the service sector, where growth slowed after previously holding up, according to data from IHS Markit.

IHS Markit’s composite eurozone PMI, seen as a key indicator of business confidence, fell to 50.4 in September, down from 51.9 in August – the lowest reading since June 2013.

A reading above 50 points indicates an expansion, and IHS Markit’s chief business economist Chris Williamson warned the latest downbeat data indicated an economy “on the cusp of sliding into decline”.

“The eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector,“Williamson said.

“The goods-producing sector is going from bad to worse, suffering its steepest downturn since 2012, but a further worrying trend is the broadening-out of the malaise to the service sector, where the rate of growth has now slowed to one of the weakest since 2014.”

IHS Markit said Brexit, fears about trade wars and other geopolitical worries had sapped business confidence and driven fears about concern about global economic growth.

Indicating there won’t be much improvement soon, a services new business index dropped to 50.9 from 52.3 and a manufacturing new orders index fell to 43.1 from 45.9, a more than seven-year low.

But overall optimism picked up a touch from August’s six-year low. The future output index nudged up to 55.7 from 55.4. – AFP, Reuters