Euro Zone Business Growth Slowest for Over Two Years in October By

© Reuters.

© Reuters. – Euro zone private sector activity grew at the slowest pace in more than two years in October, as an export-led slowdown widened out to the service sector, according to data released on Wednesday.

The preliminary reading of the Markit manufacturing purchasing managers’ index fell to a 26-month low of this month from 53.2 in September.

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

The services PMI slowed to a 24-month low of , compared to expectations for 54.5, from 54.7 a month earlier.

The composite output index, which measures the combined output of both the manufacturing and service sectors came in at a 25-month low of from 54.1, compared to expectations for 53.9.

In a sign that the slowdown has further to run, companies’ expectations of future growth slipped to the lowest for nearly four years, with a near six-year low seen in manufacturing.

Reduced optimism further dented hiring, hitting jobs growth, while price pressures remained elevated, close to seven-year highs.

“The pace of Eurozone economic growth slipped markedly lower in October, with the PMI setting the scene for a disappointing end to the year,” Chris Williamson chief economist at survey compiler Markit.

“The slowdown is being led by a drop in exports, linked in turn by many survey respondents to trade wars and tariffs, which appears to have darkened the global economic environment and led to increased risk aversion,” he added.

“The survey will make for uncomfortable reading at the ECB. Although the survey’s price gauges remain elevated and close to seven-year highs, the headline PMI has fallen to a level that would historically be consistent with a bias towards loosening monetary policy in order to prevent any further deterioration of economic growth.”

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