Business confidence within the 18 European nations that share the common European currency, the Euro has continued to weaken. The data comes from the most recent Markit (Composite) Purchasing Managers’ Index (PMI). The scale ranks growth as a value above 50 and contraction within the sector as a value below this figure. The September reading showed a decline from 52.5 in August to 52.3 indicating that demand is easing. The reading is the weakest rate of expansion since last December and is the second consecutive month of decline, but comes before any of the stimulus measures announced by the ECB could have an effect.
The composite PMI reflects the Eurozone as a whole. Germany, the Eurozone’s largest economy, showed modest growth in its PMI reading whilst the same reading in the bloc’s second largest economy, France, showed continued contraction (49.1).
The PMI figure for other sectors also declined, notably for the service sector and manufacturing which declined to its lowest level since July 2013 to stand at 50.5 (however, it is still showing expansion, of course). Business growth in France is at a three-year low in the service and manufacturing sectors.
Commenting on the data, Markit’s chief economist, Chris Williamson noted: "The survey paints a picture of ongoing malaise in the eurozone economy. With growth of output and demand slowing, employment once again failed to show any meaningful increase. Such torpor meant prices continued to fall as firms fought for customers, which will inevitably heighten concerns that the region is facing deflation."
Comments earlier in the week by ECB president, Mario Draghi, suggested that further stimulus measures may only be a matter of time. He noted that: “Additional unconventional instruments" to stimulate the nearly flat lining Eurozone economy, could be deployed "should it become necessary to further address risks of a too prolonged period of low inflation".