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Euro zone manufacturing growth dips in September: PMI
[BENGALURU] Euro zone manufacturing growth weakened slightly last month on the back of a slower pace of new orders and output, even as factories started cutting their prices again to drum up business, a survey showed.
The findings, out just a day after official data showed euro zone inflation slipped below zero again in September, are likely to pressure the European Central Bank to expand its stimulus programme.
The ECB has bought mostly government bonds worth 60 billion euros a month since March hoping to boost dangerously low inflation and anaemic growth. But it has had modest success so far and policymakers have hinted the programme could be enhanced in size or duration if required.
Markit's final manufacturing Purchasing Managers' Index was 52.0 last month, the same as a flash reading and the consensus from a Reuters poll but lower than August's 52.3. It has been above the 50 mark that separates growth from contraction for over two years.
An index measuring output that feeds into a composite PMI, due on Monday and seen as a good guide to growth, fell to 53.4 from 53.9, lower than the preliminary 53.5 reading.
Growth in new orders from abroad also dipped slightly. "Despite unprecedented central bank stimulus and substantial currency depreciation, the manufacturing sector is failing to achieve significant growth momentum and even risks stalling again," said Chris Williamson, chief economist at Markit. "With prices charged by manufacturers falling at the fastest rate in seven months amid a rapid descent in input prices, deflation worries will intensify and put pressure on the ECB to act more aggressively." The sub-index measuring output prices in the euro zone fell to 48.7 from 50.5 in August, lower than the preliminary 48.8. It was the first month of reported falling prices since March.
A PMI covering Germany, Europe's largest economy and home to some of its best-known manufacturers, fell as well to 52.3 from August's 53.3.