Growth across the 16-nation eurozone economy slumped to a seven-month low in September, with a leading indicator logging its steepest fall since the early days of the global financial crisis.
Alarm bells were raised especially as Germany recorded a “particularly steep slowing”, according to the purchasing managers’ index, a survey of 4,500 euro area companies compiled by London-based data and research group Markit.
Its combined manufacturing and services index for September crashed to 53.8 points from 56.2 in August.
Although any score above 50 indicates a trend towards growth, and this marked a 14th successive month in positive territory, concern was evident after the weakest rise since February and the fastest drop since November 2008.
“Output growth slowed in both manufacturing and services,” Markit said, dropping to 11-month and seven-month lows in the respective sectors.
At the same time, it warned that the risk of a double-dip recession was increasing despite a still solid performance in France and Germany.
France was “reassuringly resilient” and the German slowdown may represent only an expected cooling from the fast pace seen earlier in the year, survey boss Chris Williamson said.
“Outside of these two countries, double-dip recession fears will be heightened by a renewed contraction of economic activity and accelerating job losses in September,” he warned. Global Insight analyst Howard Archer said the results showed Europe’s recovery was “starting to falter appreciably (and ... facing serious economic headwinds,” including the recent firming of the euro which crimps exports.
Milan-based UniCredit analyst Marco Valli was more positive, saying the figures reflected the very sharp gains seen earlier as the economy recovered which made the slowdown now seem more marked.
He said the indicators “rose more briskly from the cyclical lows and therefore it is not surprising that the correction is now more visible here”.
“In our view, fears of a double-dip recession remain exaggerated.”