Eurozone ‘close to stalling as Brexit, trade fears bite
Brexit and trade war fears drove eurozone business growth to its lowest level in six years in September, a closely watched survey said Monday, warning that the single currency area’s economy was “close to stalling”.
Deepening problems in the manufacturing sector led the downturn, with output falling at the quickest rate since 2012, but there was also bad news in the service sector, where growth slowed after previously holding up, according to data from IHS Markit.
IHS Markit’s composite eurozone PMI, seen as a key indicator of business confidence, fell to 50.4 in September, down from 51.9 in August -- the lowest reading since June 2013.
A reading above 50 points indicates an expansion, and IHS Markit’s Chief Business Economist Chris Williamson warned the latest downbeat data indicated an economy “on the cusp of sliding into decline”.
“The eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector,” Williamson said.
“The goods-producing sector is going from bad to worse, suffering its steepest downturn since 2012, but a further worrying trend is the broadening-out of the malaise to the service sector, where the rate of growth has now slowed to one of the weakest since 2014.” IHS Markit said Brexit, fears about trade wars and other geopolitical worries had sapped business confidence and driven fears about concern about global economic growth.
The survey said the falling orders and optimism running low, September brought more gloomy news for employment, with job creation rising at the slowest rate since January 2015.
The zone’s two biggest economies suffered reverses, with Germany’s PMI falling to its lowest level in nearly seven years and France seeing a fall too.
GDP growth in the 19-country currency zone looks set to rise by just 0.1 percent in the third quarter, Williamson said, with growth momentum weakening.
Monday’s data come after the European Central Bank earlier this month launched “big bang” interventions to try to prop up the economy as the outlook darkens.
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