Eurozone Growth Is Slowing, Survey of Purchasing Managers Suggests
PARIS — The eurozone’s economic expansion continued to lose traction in September, a private-sector report said on Tuesday, the latest indication that the stagnation of the second quarter might be taking hold.
A survey of purchasing managers conducted by Markit Economics, a data analysis firm, showed that output in services and manufacturing was barely positive in September. Markit’s composite output index for the 18-nation currency area fell to 52.3, the lowest level this year, from 52.5 in August.
While a number above 50 still signals expansion, Markit said that at that level, the eurozone’s gross domestic product was likely to grow “at best” at a 0.3 percent quarterly rate in the third quarter, equivalent to a 1.2 percent annual rate. The eurozone economy stagnated in the second quarter, as Germany and Italy contracted and France did not grow.
By contrast, the United States economy grew an annualized 4.2 percent in the second quarter after a poor start to 2014, and is expected to grow more than 2 percent in the third quarter.
The eurozone’s inability to attain escape velocity has become a matter of increasing concern for policy makers at a time when some 18 million people across the bloc are unable to find work and households are reluctant to spend.
Mario Draghi, the president of the European Central Bank, warned on Monday that the recovery “is losing momentum,” and chastised governments for not taking advantage of the grace provided by low borrowing costs to carry out structural reforms.
Alarmed at the potential for Europe to pull down its global trading partners at a time of uncertainty about geopolitical risks in Russia and Ukraine, and worried that the eurozone’s low inflation might tip into deflation, the Organization for Economic Cooperation and Development last week urged the European Central Bank to undertake large-scale bond-buying to provide more monetary stimulus.
Speaking on Monday at the European Parliament, Mr. Draghi said the central bank was “ready to use additional unconventional instruments within our mandate,” an indication that quantitative easing remains an option.
The Markit survey of purchasing managers gives economists and policy makers a nearly real-time view of trends. A 2011 study by the European Central Bank described it as providing “a ‘low-tech,’ fairly accurate way of projecting G.D.P. for both the euro area and national economies.”
Chris Williamson, chief economist at Markit, said the latest surveys indicated the fourth quarter might also be weaker than previously anticipated, as manufacturing companies’ new orders are decreasing for the first time in more than a year, “and business expectations about the year ahead turned down in the services sector, led down by a slump in confidence in Germany.”
Source: nytimes.com