Eurozone economy stagnates at start of fourth quarter - IHS Markit

According to the report from IHS Markit, the eurozone’s private sector economy stagnated during October, as signalled by Eurozone PMI Composite Output Index posting a level of 50.0. Whilst an improvement on the earlier flash reading, the index was nonetheless down from 50.4 in September and ended a three-month period of growth.

In line with recent developments, the headline index masked the continuation of a two-speed economy in October. Manufacturing output growth was sustained, and to the strongest degree in over two and-a-half years. In stark contrast, service sector activity contracted again, deteriorating to the greatest degree since May.

For the first time in four months, levels of incoming new business declined as strong gains in manufacturing new work were more than offset by weakness in services. There was some positive news on export sales, however, which rose for a second successive month. 

The challenging business environment continued, however, to weigh on company pricing power. Latest data showed that average output charges declined for an eighth successive month, albeit marginally and at the weakest rate in the current sequence of deflation.

Looking ahead to the coming 12 months, business confidence remained in positive territory during October but fell to its lowest level since May.

October’s Eurozone PMI® Services Business Activity Index fell to a level of 46.9. Down from 48.0 in the previous month, the latest index reading was the lowest recorded by the survey since May and indicated a second consecutive monthly decline in activity.