Eurozone business activity growth lowest for 20 months

Eurozone business activity expanded at its weakest rate since the start of 2015 this month, as growth paths diverged but firms stopped cutting prices for the first time in a year, surveys showed yesterday.

Markit’s composite survey showed a big split between buoyant manufacturers and struggling service industry firms and a similar divide in growth rates among members of the currency union.

“It’s a pretty disappointing end to the third quarter. We have seen unevenness between manufacturing and services but also between the nations,” said Rob Dobson, director of economic indices at Markit.

“Germany slowed, France did quite well, those outside the big two slowed.”

The euro area flash composite Purchasing Managers’ Index, seen as a good overall growth indicator, fell to 52.6 from August’s 52.9. A reading above 50 indicates growth but that was its lowest level since January 2015.

However, eurozone consumer confidence rose as expected in September, data showed, ending a three-month fall and indicating consumer concern over the economic outlook as a result of Britain’s vote to quit the EU could be easing.

“September’s slight increase in eurozone consumer confidence reinforces belief that the UK’s Brexit vote is not weighing markedly on eurozone economic activity for now at least,” IHS Global Insight economist Howard Archer said.

“The situation could change in 2017 when the UK likely formally starts divorce proceedings,” he added.

Reuters