Eurozone Private Sector Growth At 4-Month Low

(RTTNews) - The euro area private sector softened to a four-month low in October as activity in France shifted back into contraction amid tightening financial conditions and rising political pressures, flash purchasing managers' survey data from S&P Global revealed Friday.

The composite output index fell to 51.9 in October from 53.1 in the previous month, falling below the forecast of 52.7.

Both manufacturing and services sectors reported weaker growth. The manufacturing Purchasing Managers' Index registered 52.4, down from 52.9 in the previous month. The score was expected to drop to 52.7.

The services PMI declined to 51.7 from 53.0 a month ago, also disappointing expectations of 52.6.

The flash PMI reading is consistent with GDP growing at a 0.3 percent quarterly cadence, S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

"A key drag on growth was a renewed drop in business activity in the French services sector," he added.

French private sector slipped back into contraction after posting a first expansion in 10 months during September. Meanwhile, Germany and the rest of the member countries as a whole continued to grow, albeit at slower pace.

The October PMI shows that the economy remained resilient amid higher energy prices, ING economist Bert Colijn said. Growth concerns seem mostly centered around France while input costs are rising across the Eurozone again, he added.

Output and new orders both increased for the fourth month in a row in October, but at slower rates. Meanwhile, employment was broadly unchanged, rising only fractionally, amid a less positive outlook for the coming year.

A stronger growth in manufacturing input costs pushed up overall input price inflation, but output prices rose at a slower pace than in September, the survey showed. Germany's private sector growth softened in October, suggesting that the recovery remains fragile. The flash composite output index registered 52.8, down from an 11-month high of 53.8 in September and economists' forecast of 53.3.

Nonetheless, the score signaled solid pace of expansion by historical standards. The slowdown was broad-based by sector. The services PMI fell more-than-expected to 51.7 in October from 52.9 in the previous month. The reading was seen at 52.5.

Likewise, the factory PMI stood at 54.2 compared to 53.9 in September. The score was forecast to fall moderately to 53.5.

France's private sector activity contracted in October, marking a reversal from September's growth rebound. The flash composite output index fell to a four-month low of 48.4 from 51.1 in the previous month. Economists had forecast the index to drop moderately to 50.5.

The services PMI posted 48.4, down from 51.2 in September. At the same time, the manufacturing PMI reached an 11-month low of 49.3 compared to 50.6 in the prior month.