Eurozone growth eases as industry stutters

US Purchasing Managers’ Index falls to 53.4 in September — a 17-month low

Eurozone business growth eased again in September, adding to signs that momentum in the currency bloc is well past its peak with country data for Germany and France also highlighting a slowdown, a survey showed yesterday.

While the regional slowdown was slightly sharper than expected, growth remained robust and firms were able to increase their prices, purchasing managers said, offering some comfort to policymakers at the European Central Bank.

But the surveys highlighted a divergence between services and manufacturing.

The bloc’s dominant service industry beat forecasts for no change in the pace of growth from last month. IHS Markit’s Eurozone Services Flash Purchasing Managers’ Index (PMI) rose to 54.7 from 54.4. Anything above 50 indicates growth.

Manufacturers, however, failed to live up to expectations.

The factory PMI slumped to a two-year low of 53.3 from 54.6, significantly below all forecasts, which had a median prediction of 54.4. An index measuring output, which feeds into a composite PMI, sank to 52.8 from 54.7. It hasn’t been lower since May 2016.

In the US, the seasonally adjusted IHS Markit Composite Purchasing Managers’ Index fell to 53.4 in September — a 17month low. Future expectations in both the manufacturing and service sectors fell to the lowest level this year, and the secondlowest in over two years, as optimism deteriorated.

However, while the overall index suggests that the pace of economic growth slowed to its lowest point in almost oneand-a-half years, the report did show some positive signals. Hiring grew, “indicative of non-farm payroll growth topping 200,000 in September,” Chris Williamson, economist at IHS Markit said. Further, Williamson noted, “new orders growth accelerating and backlogs of work rising due to weather-related disruptions, the survey data suggest underlying demand remains robust and that there’s an accumulation of work that will roll over into stronger economic growth in coming months.”

Economists earlier this month unanimously said the US-China trade war threatened the outlook for the Eurozone and that economic growth will be modest at best over the coming year.

IHS Markit said the composite PMI, which dipped in September to 54.2 from 54.5, below a median forecast in a Reuters poll for 54.4, pointed to GDP increasing 0.5 per cent this quarter. The Reuters poll predicted 0.4 per cent growth.

A Eurozone composite future output index, which measures optimism, rose to 61.9 from August’s 23-month low of 61.6.