According to the report from IHS Markit, growth of the eurozone’s private sector slowed further towards stagnation in September. 

The IHS Markit Eurozone PMI Composite Output Index slipped to a three-month low of 50.4, down from August’s 51.9 and indicative of only a marginal expansion. The final reading was, however, firmer than the earlier flash estimate (50.1). The composite PMI belied a two speed economy during September. Led by a strongly performing Germany, overall regional manufacturing output rose at the fastest pace for over two-and-a-half years. In contrast, service sector activity slipped back into contraction by registering its worst performance since May.

Incoming new business in the eurozone increased only slightly during September, and at the slowest rate in the current three-month period of growth. That was in spite of the first rise in overall export trade for the first time in over two years.  As new business growth softened, and with evidence of ongoing spare capacity across the private sector economy, companies were again able to comfortably deal with overall workloads. According to the latest data, backlogs of work declined for a nineteenth successive month albeit again only modestly.

Employment numbers were again reduced, marking a seventh successive monthly fall in staffing levels. That said, the rate of contraction was the weakest recorded in the current sequence with all nations registering slower falls when compared to August.

Operating expenses increased for a fourth successive month during September, with the rate of inflation solid. Input price inflation was sharpest in Spain. Meanwhile, the challenging business environment, characterised by still-weak demand and strong competitive pressures, weighed on company pricing power. Subsequently a seventh successive monthly decline in output charges was recorded in September, with the fall the greatest since June.

Business expectations did, however, improve to their highest level for seven months with confidence broadly in line with its long run average.