Eurozone Private Sector Expands Marginally In September

Amid rising coronavirus infections, the euro area private sector expanded only marginally in September as the service sector slipped back into contraction, while manufacturing output grew the most in over two-and-a-half years, final survey data from IHS Markit showed Tuesday.

The composite output index fell to a three-month low of 50.4 in September from 51.9 in the previous month. The flash score was 50.1.

The services Purchasing Managers’ Index came in at 48.0, down from 50.5 in August but above the flash score of 47.6.

“With the eurozone economy having almost stalled in September, the chances of a renewed downturn in the fourth quarter have clearly risen,” Chris Williamson, chief business economist at IHS Markit said.

“Any further deterioration of the PMI numbers as we head through the fourth quarter will add further weight to calls for more stimulus,” Williamson added.

The survey showed some notable divergences in activity at the country level during September.

Germany recorded a marked rate of growth, with its performance far outstripping the rest of the region. However, the service sector recovery lost further momentum with the activity rising at the slowest pace for three months.

The services PMI dropped to 50.6 from 52.5 a month ago. The flash score was 49.1. Meanwhile, the composite PMI advanced to 54.7 from 54.4 in August. This was also above the flash reading of 53.7.

Italy was the only other nation to record expansion in September. The composite output index rose to 50.4 in September from 49.5 in August. The headline services PMI posted 48.8 in September versus 47.1 in the previous month.

Meanwhile, France private sector slipped back into contraction largely due to a sharp rise in covid-19 infection rates.

At 48.5, France’s final composite score came in line with the flash score and was down from 51.6 in August. The reading signaled the first decline since May.

The services PMI declined to 47.5 from 51.5 a month ago. The score matched the flash estimate.

Spain’s private sector contracted for the second straight month as rising covid-19 infections weighed on the services activity. The composite output index declined to 44.3 from 48.4 in August. The services PMI came in at 42.4 compared to 47.7 a month ago.

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