Eurozone business activity stagnates - PMI

6th Nov 2024 09:00

(Sharecast News) - The Eurozone economy failed to gain ground in October, a closely-watched survey showed on Wednesday, weighed down by weakness in Germany and France.

The latest seasonally-adjusted Eurozone composite PMI output index from Hamburg Commercial Bank was 50.0, marginally ahead of September's 49.6 and forecasts for 49.7.

It remains well beneath the survey average of 52.5, however.

A reading of 50.0 indicates no change, while one above it suggests growth. A print below 50.0 points to contraction.

HCOB said shrinking levels of business activity in Germany and France, the bloc's biggest economies, had offset expansion elsewhere.

Spain's composite PMI output index was 55.2, while Italy's reached 51.0. But Germany's was 48.6 and France's 48.1.

Strong services activity - which rose for the ninth consecutive month - was also offset by a slide in manufacturing production.

The services PMI business activity index came in at 51.6 in October, up from 51.4 a month previously.

In contrast, the manufacturing PMI output index was 45.8, albeit an improvement on September's 44.9.

The composite PMI is a weighted average of the two indices.

Cyrus de la Rubia, chief economist at HCOB, said: "The modest expansion of the services sector has been crucial in keeping the currency union out of recession.

"We are confident service providers will continue to increase their activity, as lower inflation and higher wages mean higher private consumption.

"It is not clear if stagnation of the Eurozone economy will be prevented. Our GDP forecast for the fourth quarter...signals a slight contraction, although growth is still possible if the manufacturing sector improves over the next two months."

Ricardo Amaro, lead economist at Oxford Economics, said: "The broad story remains intact. The PMIs continue to point to manufacturing weakness and a moderate growth story in services.

"In addition, the employment, new orders and sentiment data all reinforce signs of a challenging outlook.

"Economic data continues to underscore Eurozone's economic challenges, with the outlook set to receive an added element of uncertainty from a Trump presidency in the US."