Companies across the 19-nation eurozone are again investing less in their business, sending a relevant indicator for September growth to a 20-month low and increasing pressure for governments to halt the slide.
Financial information company IHS Markit published its preliminary September Composite Purchasing Managers Index (PMI) for the eurozone on Friday, saying the new data was "disappointing" because business activity had slowed to its weakest pace since January 2015.
The PMI for this month had fallen to 52.6 points from 52.9 points in August, indicating that the bloc's underlying performance was sluggish. Although a reading above 50 points still indicates a growing economy, HIS urged governments to do more to shore up activity in the 19 countries using the euro.
Senior IHS Markit Economist Rob Dobson said the report showed the eurozone economy had ended the third quarter on a disappointing note. Underlying growth was sluggish at about 0.3 percent for the quarter, Dobson said, and "it remains clear that the economic upturn is still fragile and failing to achieve any real traction."
The IHS economist called on the European Central Bank (ECB) to provide further monetary policy support later in the year if economic conditions moderated further.
The PMI measures companies' readiness to spend on their business and so gives a good idea of how the underlying economy is performing.
A more detailed look at the September figures shows that the services sector is having a particularly weak month. Services PMI came in at 52.1 points, down from 52.8 in the previous month and hitting a 21-month low. The sector accounts for about two-thirds of economic activity in an industrialized nation, thus weighing more on the overall PMI.
By contrast, the PMI for the manufacturing industry rose to 52.6 points from 51.7 in August - marking a new three-month high. A similar discrepancy emerged among the bloc's biggest economy, Germany and France. While German growth eased to a 16-month low, France's business activity surged at its fastest pace since June last year.
Generally, the September PMI data shows that the eurozone recovery continues bumping along, as it has been since the 2008 financial crisis and the ensuing debt crisis in Europe. Massive stimulus programs launched by the ECB have achieved only so much, and tough austerity measures introduced in a number of debt-laden countries are still dampening growth.
uhe/kd (Reuters, AP, AFP)