Eurozone growth weakens to lowest in over two years
Staff Writer |
October saw the euro area economy expand at its slowest rate for more than two years, according to the final IHS Markit Eurozone PMI Composite Output Index.
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Despite coming in higher than the earlier flash estimate of 52.7, October’s final reading of 53.1 was down from the previous month’s 54.1 to the lowest since September 2016.
Both the manufacturing and service sectors recorded slower rates of growth during October.
Following on from September, manufacturing registered the weaker increase in output, posting its lowest growth in nearly four years.
Despite remaining at a solid level, the service sector saw its slowest expansion since the start of 2017.
By nation, the strongest increase in activity was again seen in Ireland, despite output rising at its slowest rate for seven months.
Both France and Spain recorded firmer gains in activity, with growth in each case remaining above historical averages.
In contrast, Germany saw growth slump to a 5-month low and the joint lowest in over two years, whilst Italy registered a fall in activity for the first time since the end of 2014.
The downturn in overall activity growth was linked to a weaker gain in incoming new business.
October’s survey data showed new work rising at a modest pace that was the slowest since September 2016.
Capacity remained under some pressure in October as backlogs of work increased again.
Although modest, backlogs have risen continuously for nearly three-and-a-half years, a rise which continued to encourage companies to take on extra staff.
Indeed, employment rose markedly, extending the current sequence of growth to four years.
Staffing levels rose at elevated rates in Germany, France and Ireland, compared to much more modest gains in Italy and Spain.
Meanwhile, prices data signalled another sharp increase in company operating expenses.
Rising energy and fuel prices were widely reported to have underpinned inflation, whilst there was some evidence of higher labour costs especially in Germany. ■