Euro zone factory growth slowed again in October, in latest sign of weakness - PMI

Euro zone factory growth slowed again in October, in latest sign of weakness - PMI
FILE PHOTO: Aerial view of containers at a loading terminal in the port of Hamburg, Germany August 1, 2018. REUTERS/Fabian Bimmer/File Photo Copyright Fabian Bimmer(Reuters)
Copyright Fabian Bimmer(Reuters)
By Reuters
Share this articleComments
Share this articleClose Button

By Jonathan Cable

LONDON (Reuters) - Euro zone factory activity grew at its weakest pace in more than two years last month as export orders fell for the first time since late 2014, a survey showed, adding to evidence the bloc's economy is well past its peak.

Policymakers at the European Central Bank are expected to shutter their 2.6 trillion euro bond-buying programme by the end of the year and the latest survey of purchasing managers will likely make uncomfortable reading.

IHS Markit's October final manufacturing Purchasing Managers' Index sank to 52.0 from September's 53.2, a touch below a flash reading of 52.1 but above the 50 level separating growth from contraction.

That was its lowest reading since August 2016 and an index measuring output, which feeds into a composite PMI due on Tuesday, endured a similar decline. It fell to a near four-year low of 51.3 from 52.7, albeit just above a flash estimate.

"Concerns about the euro zone manufacturing sector intensified at the start of the fourth quarter," said Chris Williamson, chief business economist at IHS Markit.

"The combination of destocking, deteriorating order books and drop in business optimism will add to concerns that growth risks are shifting to the downside rather than being 'broadly balanced', as indicated by the ECB."

Earlier surveys from France and Germany - the bloc's two biggest economies - also highlighted weaker growth while Italian factory activity contracted. Only Spanish producers bucked the trend amongst the top four economies and accelerated.

British factories are likewise suffering, a sister survey showed on Thursday, due to concerns about the country's approaching departure from the European Union and increased global trade tensions.

Washington and Beijing have imposed tariffs on billions of dollars of each others' goods - while threatening more - and the ripple effects of the trade war are being felt globally.

"New orders fell into decline for the first time in almost four years as trade woes escalated. Export sales fell for the first time in over five years," Williamson said of the euro zone.

The sub-index measuring new export orders, which includes trade between member countries, fell to 49.1 from September's 50.2, its first time sub-50 since June 2013.

Indicating little sign of an imminent turnaround, optimism among purchasing managers was its weakest since late-2012, backlogs of work were run down and factories built up a surplus of finished products.

(Writing by Jonathan Cable; Editing by Hugh Lawson)

Share this articleComments

You might also like