Eurozone economy remains close to stagnation - survey
By Abigail Townsend
Date: Wednesday 06 Nov 2019
(Sharecast News) - The eurozone economy struggled to make headway in October as the region's ailing manufacturing sector weighed heavily.
The IHS Markit Eurozone Composite PMI Output Index printed at 50.6 in October, an improvement on the 50.1 recorded in September and an upward revision on the initial flash reading of 50.2.
However, the rate of growth was still among the weakest seen during the last six-and-a-half years. Service sector companies indicated further growth during the month, but at the second weakest rate since January, while manufacturing firms recorded a ninth successive month of declining production.
Within individual countries, France recorded the highest composite PMI, at 52.6. Spain, Italy and Ireland also showed marginal growth, at 51.2, 50.8 and 50.6 respectively. But Germany, the region's largest economy, remained in contraction at 48.9.
Chris Williamson, chief business economist at IHS Markit, said: "The euro area remained close to stagnation in October, with falling order books suggesting that risks are currently tilted towards contraction in the fourth quarter. While the October PMI is consistent with quarterly GDP rising by 0.1%, the forward-looking data points to a possible decline in economic output in the fourth quarter.
"Much depends on geopolitical issues, such as US tariff developments and Brexit, though we will also be watching Christine Lagarde's first policy meeting on 12 December to assess the appetite for further stimulus from the European Central Bank."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the overall eurozone PMI had been supported by upward revisions to French manufacturing data.
He added: "We concede that the services data have weakened in the eurozone as a whole in the past few months, but they still look overall resilient, and it would be very pessimistic to assume that the slowdown in manufacturing is about to seriously infect the domestic economy, pushing the euro area into recession. Rather, the PMIs signal still-sluggish growth in the fourth quarter."
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