Monday 23 September 2019 9:36 am

Eurozone comes close to a standstill as activity hits six-year low

Economists warned the Eurozone was on the verge of stalling this month as demand for goods and services fell at its fastest rate since 2013.

Slowing service sector expansion compounded a worsening manufacturing recession to knock the Eurozone’s composite output to a 75-month low of 50.4, according to IHS Markit’s Purchasing Managers’ Index (PMI).

Read more: European Central Bank defends cash splurge on Eurozone

That puts the area barely above the 50 measure indicating flat growth, while manufacturing plunged to an 81-month low PMI score of 46.

Meanwhile prolonged fears about trade wars and Brexit meant confidence for the year ahead ebbed to one of the lowest levels IHS Markit has recorded since 2012.

“The eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector,” Chris Williamson, IHS Markit’s chief business economist, said.

“The overall picture of an economy on the cusp of sliding into decline is underscored by a further deterioration in firms’ pricing power, with average prices charged for goods and services barely rising in September.”

He warned that the latest figures will pile pressure on the European Central Bank to improve its recent controversial stimulus package.

September’s 50.4 score across the Eurozone’s main industries dropped from 51.9 in August, and was prompted by the sharpest slide e in new orders for goods and services since June 2013.

Backlogs of work dropped for the ninth time in the past 10 months as bosses switched workforces’ focus onto getting through old orders.

Read more: Eurozone output beats expectations in August but economy remains weak

“The goods-producing sector is going from bad to worse, suffering its steepest downturn since 2012,” Williamson said.

“The details of the survey suggest the risks are tilted towards the economy contracting in coming months. Most vividly, new orders for goods and services are already falling at the fastest rate since mid-2013, suggesting firms will increasingly look to reduce output unless demand revives.”