Eurozone private sector activity grew at the slowest rate for over two years in October as an export-led slowdown continued to broaden-out to the service sector amid weak manufacturing performance.
The composite output index declined more-than-expected to 52.7 from 54.1 in September, flash data from the IHS Markit's purchasing managers' survey showed on Wednesday.
The expected score was 53.9, which was the lowest score since September 2016. However, a reading above 50 indicates expansion.
The slowdown was largely driven by manufacturing with factory output logging the weakest monthly gain since December 2014. At the same time, service sector activity growth eased to a two-year low.
The services Purchasing Managers' Index came in at 53.3, down from 54.7 in September and below the forecast of 54.5.
Likewise, the manufacturing PMI fell to 52.1 from 53.2 in September. Economists had forecast a reading of 53.0.
"The survey is indicative of GDP growth waning to 0.3 percent 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," Chris Williamson, chief business economist at IHS Markit, said.
Amid the fiscal stand-off between Rome and Brussels, as well as the increasingly jittery global markets, the European Central Bank is likely to stress at its meeting tomorrow that monetary policy tightening remains dependent on the incoming data, Stephen Brown and Melanie Debono, economists at Capital Economics, said.
Within the currency bloc, growth moderated especially sharply in Germany, sliding to the weakest since May 2015.
Germany's private sector expanded at the slowest pace for almost three-and-a-half years in October with both the manufacturing and service sectors showing notable losses of momentum, survey results revealed.
The composite output index fell to a 41-month low of 52.7 from 55.0 in September. The score below its long-run average of 53.4 reflected weaker increases in both services and manufacturing output.
The flash services PMI came in at 53.6 versus 55.9 in the previous month. The expected reading was 55.5.
Similarly, the flash manufacturing PMI dropped more-than-expected to 52.3 from 53.7 a month ago. Economists had forecast the reading to fall to 53.4.
Business activity growth picked up slightly in France, but was nevertheless the third-weakest seen since the start of last year.
France's composite output index rose unexpectedly to 54.3 in October from 54.0 in September, while it was forecast to drop to 53.9.
Manufacturing companies in France reported deterioration in output, while service sector firms posted the fastest rise in activity for four months.
The manufacturing PMI slid to 51.2 from 52.5 a month ago. This was the lowest score in 25 months. Meanwhile, the services PMI improved to a 4-month high of 55.6 from 54.8 in the previous month. The reading was also above the forecast of 54.7.
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