Economy
Euro Zone Growth Slows to Four-Month Low in October, PMI Shows
The euro zone's expansion cooled sharply in October as demand came close to stalling, costs rose and business confidence hit its weakest level in five months, though growth stayed above the line separating expansion from contraction.
Photo: Forextime.com / Wikimedia Commons (CC BY 2.0). Photo shows a stock market concept, not the euro zone economy.
The euro zone's economic expansion slowed sharply in October but remained resilient, a business survey showed on Wednesday, as demand — a key gauge of underlying momentum — came close to stalling while rising costs squeezed businesses and confidence hit its weakest level in five months.
The S&P Global Eurozone Composite PMI fell to 51.7 in October from 53.1 in September, a four-month low and below a preliminary estimate of 51.9. Readings above 50.0 indicate growth in activity.
"October's PMI survey data indicate that the euro zone economy is growing at a respectable though unexciting 0.3% rate at the start of the fourth quarter, building on the robust performance seen throughout the third quarter," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
New orders grew only marginally in October, a steep drop from three months of stronger growth, with demand for services edging lower. Overall export orders rose for a third consecutive month but also lost pace, and both manufacturing and services output expanded at slower rates, pointing to a broad-based cooling.
Employment fell marginally, with services firms leading the decline and partly negating a slight rise in factory headcounts. Cost pressures intensified, with input price inflation climbing to a five-month high; businesses raised their charges sharply, though slightly less aggressively than in September. Williamson linked the upward price pressures largely to higher energy prices, which he said are squeezing customers' budgets and discouraging spending.
France was the weakest performer, slipping back into contraction after a brief recovery in September. Germany, Italy, Spain and Ireland continued to grow, though all lost momentum. The euro zone services PMI, which feeds into the composite index, fell to 51.4 from 53.0 in September, also a four-month low.
Business confidence weakened for a third straight month and remained below its long-run average. As expected, the European Central Bank left interest rates on hold last week, but economists polled by Reuters last month said it would hike again in December.
Source: Reuters
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Pawartaenggal Newsroom