The eurozone’s recovery is still struggling to get off the ground, and remains “sluggish,” according to the latest PMI data from IHS Markit released on Friday morning.
Markit’s final composite PMI figure for the eurozone — a measure of growth in the continent-wide economy — confirmed a reading of 53.3 in October.
That was a significant rise from September’s reading of 52.6, but was a little lower than the 53.7 flash reading from last week, and remains low in the grand scheme of PMIs.
The purchasing managers index (PMI) figures from Markit are given as a number between 0 and 100. Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the better.
So, while the eurozone is still growing, what is worrying are the comments of IHS Markit’s Senior Business Economist Chris Williamson in a release alongside the data.
Williamson argued that the political uncertainty in Europe right now, surrounding things like Brexit, and upcoming elections across the continent, means that businesses are worried about, which in turn is stunting growth.
Here is what he had to say (emphasis ours):
“The weaker than previously indicated expansion in October raises doubts about whether the eurozone is breaking out of the sluggish growth phase seen throughout much of this year.
“The October PMI signals a mere 0.3% GDP growth rate, suggesting the fourth quarter could see growth unchanged on that seen in the second and third quarters despite the ECB’s further efforts to stimulate the economy.”
Williamson continues, noting that growth across different parts of the continent is vastly different:
“It’s a mixed picture of performance within the single currency area. Germany has revived to return as the major growth driver, with the October PMI signalling a 0.5% quarterly GDP growth rate. Spain is also enjoying a growth rate of 0.6-0.7% as the PMI edged higher. In France, although the rate of expansion slowed in October, recent months have seen the best performance for a year.
“Italy is a major concern, however, with growth having ground almost to a halt amid growing political uncertainty. Similarly, while Ireland’s PMI remains consistent with GDP rising at a quarterly rate approaching 1%, that’s down sharply from earlier in the year as worries mount about the potential impact of Brexit.”
Here is the full scoreboard of PMIs:
- Services PMI — 52.8 (53.5 expected)
- Composite PMI — 53.3 (53.7 expected)
And here is IHS Markit’s chart:
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