Wednesday 24 October 2018 11:24 am

Global trade tensions send Eurozone PMI to two-year low


The Eurozone economy grew at the slowest rate for more than two years in October as uncertainty over global trade relations deepened an export-led slump.

The purchasing managers index for the eurozone fell to 52.7 this month, down from 54.1 in September, hitting a 25-month low. 

Read more: EU seeks to cool down Italy tensions as economy posts halting growth

Germany was hit the hardest within the Euro area, with growth sliding to the weakest level since May 2015. 

Companies' expectations for future growth slipped to the lowest for almost four years and reduced optimism hit jobs growth, according to the data compiled IHS Markit, fuelling speculation that the slowdown could continue in coming months. 

IHS Markit chief business economist Chris WIlliamson said: "The pace of Eurozone economic growth slipped markedly lower in October, with the PMI setting the scene for a disappointing end to the year.

"The survey is indicative of GDP growth waning to 0.3 per cent in the fourth quarter, and forward-looking indicators, such as measures of future expectations and new business inflows, suggest further momentum could be lost in coming months.

“The slowdown is being led by a drop in exports, linked in turn by many survey respondents to trade wars and tariffs, which appears to have darkened the global economic environment and led to increased risk aversion.

"It is therefore not surprising to see the slowdown broadening out across the economy, hitting the service sector.

“The survey will make for uncomfortable reading at the ECB. Although the survey’s price gauges remain elevated and close to seven-year highs, the headline PMI has fallen to a level that would historically be consistent with a bias towards loosening monetary policy in order to prevent any further deterioration of economic growth.”

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