Eurozone's manufacturing growth stalls as services decline

Source: Dukascopy Bank SA
"Prices continued to fall as firms fought for customers, which will inevitably heighten concerns that the region is facing deflation. There are also worrying signs that growth could slow further in the fourth quarter."
- Markit Economics

Manufacturing activity in the single currency area registered only minor changes in September, as the benchmark purchasing managers' index for this particular sector decreased from 50.5 in August to 50.4 points this month. While indicator for Germany declined more considerably, French gauge increased in value, however, remained below the 50-points threshold at 48.8. The reading above this point indicates expansion, while the mark below 50 points is pointing on downturn in activity. At the same time, the PMI indicator for services sector in the Eurozone fell from 53.2 points to a 52.8 mark in September. For this industry, better performance was showed by Germany, rather than France.

Economists are looking at negative effects, which could potentially influence activity changes in September. Among important ones, they mention inflation, which was revised up to 0.4%, but still remains well below the ECB goal of 2%. It forces consumers to save money, as they are sceptical about the prices going significantly up in the nearest future. Still, analysts expect the largest economy of the Euro area to advance in July-September quarter after unexpected drop in the second quarter. France is likely to show no expansion for the fourth quarter in a row, while the rest of the region is forecasted to grow moderately. On average, the whole Eurozone's economy is projected to add 0.3% in the third quarter.
© Dukascopy Bank SA

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