According to the latest flash PMI data, the Eurozone economy remained close to stagnation at the start of the fourth quarter, with demand for goods and services falling for a second successive month. A further steep decline in manufacturing output was accompanied by one of the weakest service sector expansions since 2014. Future expectations sank to the gloomiest since 2013 and jobs growth hit the lowest since 2014. Selling price inflation meanwhile stuck at a near three-year low amid muted cost pressures. By country, an improved performance in France helped keep the eurozone out of contraction, alongside a mild easing in the rate of decline in Germany. However, the rest of the region slowed closer to stagnation.

At just 50.2 in October, the ‘flash’ IHS Markit Eurozone Composite PMI rose only marginally from 50.1 in September to signal the second smallest expansion of output across manufacturing and services since the current upturn began in July 2013. New orders for goods and services fell for a second month in a row, the rate of decline easing slightly but nevertheless adding to the worst picture of demand since mid-2013 in recent months.

Service sector growth picked up slightly compared to September but continued to run at one of the weakest rates since late-2014 as new business inflows slipped closer to stagnation. Future expectations for output meanwhile fell to the lowest since May 2013, prompting companies to take an increasingly cautious approach to hiring. Jobs growth consequently sank to the lowest since December 2014, led by the steepest loss of manufacturing jobs since the start of 2013.