Economic growth across the 19-country eurozone is showing signs of slowing, according to a survey conducted before any assessment of the impact on German industry of the emissions-rigging scandal engulfing carmaker Volkswagen.
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Markit’s flash composite Purchasing Managers’ Index (PMI) tracking manufacturing and services activity, which accounts for more than two-thirds of the German economy, inched down to 54.3 from 55.0 in August.
A Reuters poll had predicted a dip to 54.1.
“Exports are under pressure from Asia and that has lowered overall demand”.
European Central Bank Chief Economist Peter Praet said Monday that policy makers would react forcefully if it considered its inflation objective to be in danger because of slower growth in emerging markets or a tightening in financial conditions, an indication they are willing to take additifonal stimulus measures if needed, including a program of government bond purchases known as quantitative easing.
“The disappointing performance of the goods producing sector has so far been offset by stronger expansion in the larger services sector but there are question marks over whether this growth can be sustained as we move towards the end of the year”, said Markit’s chief economist Chris Williamson.
The projected quarterly growth rate is, according to Williamson, below what is generally regarded as the eurozone’s long-term potential and puts the region on course to expand by just 1.6 per cent this year. Backlogs of work rose to the highest since mid-2011. That was the same as August, which was its lowest since October 2013.
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Service companies were able charge higher prices for the first time in over four years, suggesting disinflationary pressures may be ebbing in the euro zone.
