Euro Area Growth Slows, More Stimulus Eyed

The euro region’s economic recovery risks faltering after growth momentum eased in September, Markit Economics said.

A Purchasing Managers’ Index for manufacturing and services fell to 53.6 in September from 54.3 in August, the London-based company said in a report on Monday. That’s below a Sept. 23 preliminary reading of 53.9. A print above 50 indicates expansion.

Policy makers have pointed to challenges from weaker global growth to stubbornly high unemployment that could harm the currency bloc’s fragile revival. The European Central Bank is struggling with the fallout of a slump in energy prices that is countering the effects of its quantitative-easing program.

“The failure of the economy to pick up speed over the summer will be a disappointment to the ECB, especially with job creation sliding to an eight-month low,” said Chris Williamson, chief economist at Markit. “The weakening of the pace of expansion in September raises the risk of growth fading further in the fourth quarter, which would in turn boost the likelihood of the ECB opening the QE taps further.”

The euro-area inflation rate fell to minus 0.1 percent in September. Even so, the region’s economy probably expanded 0.4 percent in the three months through September, Markit said in the report. New business increased last month and backlogs of work rose at the fastest pace in more than four years.

Spain was probably one of the region’s strongest performers in the third quarter, with a PMI index pointing to growth of at least 0.8 percent. Similar gauges suggest that Germany, Italy and France expanded by 0.4 percent, 0.3 percent and 0.2 percent, respectively.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell