Eurozone growth hits slowest pace since 2014

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The Eurozone: Going nowhere, fast (Source: Getty)

Economic growth in the Eurozone is crawling along at its slowest pace since the end of 2014, a leading economic indicator has shown.

The closely-watched purchasing managers' index (PMI) for activity across the 19-member bloc has dipped to its lowest level in 20 months, raising yet more concerns about sluggish growth on the continent.

On an index where scores above 50 indicate expansion, the PMI came in at 52.6 for September, down from 52.9 last month. The slight decline represents a dulling rather than a dramatic shock or slowdown, and corresponds with a quarterly growth rate of around 0.3 per cent - the same as that registered in the second quarter of the year.

For the first time in four years, France's PMI score came in above Germany's, as the Eurozone's largest economy saw its growth rate tumble to a 16-month low. The weakness across the single currency area was led by a falling off in the dominant services sector, while conditions for manufacturers continued to improve.

Rob Dobson of Markit, which compiles the figures, said: "The Eurozone economy ended the third quarter on a disappointing note. While the underlying picture remains one of sluggish growth ... it also remains clear that the economic upturn is still fragile and failing to achieve any real traction."

Markit's Dobson added: "Job creation is wavering as a result."

Stephen Brown, a European economist at Capital Economics said "pressure on the Europrean Central Bank (ECB) to take action will continue to mount", given the disappoint readings. The ECB is expected to announce an extension to its €80bn (£69bn) a month quantitative easing programme which is due to wind up in March 2017.

Inflation is still in the doldrums, at just 0.2 per cent across the Eurozone, giving the ECB scope to act. However, in the PMI surveys businesses reported costs were continuing to rise, suggesting price rises could pick up.

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