Growth of business activity in the Eurozone private sector eased to a seven-month low at the end of the third quarter. At 54.1 in September, up slightly from the earlier flash estimate of 53.8, the Markit Final Eurozone Composite Output Index was nonetheless down sharply from 56.2 in August. However, the average headline index reading in Q3 was only slightly below the three-year high reached in the second quarter.
Although September saw service sector business activity rise at the slowest pace since March, the rate of growth slightly outperformed that signalled for manufacturing for the first time in 15 months. Manufacturing output expanded at the weakest pace since last October.
The slowdown was broad-based by nation, with growth easing in Germany, France and Italy and renewed contractions signalled for Spain and Ireland. National disparities remained prominent, with growth still largely reliant on the region’s two largest economies. France recorded the strongest growth of all countries for the fifth month running, despite posting its slowest expansion of business activity since March, followed by Germany, where the pace eased sharply to an eight-month low. Italy’s expansion was the joint second-weakest so far this year. Meanwhile, further highlighting the weakness at the Eurozone periphery, the Greek manufacturing sector remained in deep recession.
New business rose for the thirteenth successive month in September. However, the rate of expansion was the weakest since last November, reflecting slower growth of both domestic and external demand. Rates of increase in total new orders moderated in both the manufacturing and service sectors, and manufacturing new export orders rose at the slowest pace for ten months.
Although slower growth of new business was recorded by both France and Germany, they continued to outpace the rates of increase seen elsewhere (in France’s case by some margin). New business growth remained subdued in Italy, despite accelerating slightly, while sales in Spain and Ireland fell back into contraction territory.
September saw a further modest increase in employment, with job creation continuing in both the manufacturing and service sectors. However, higher employment was confined to France and Germany, where rates of jobs growth hit new post-recession peaks. In contrast, employment fell in Italy, Spain and Ireland. The subdued rate of increase in Eurozone employment partly reflected a slower accumulation of backlogs of work, which rose at the weakest pace in seven months.