Euro zone September PMI slide suggests no return to growth this year

Wed Oct 3, 2012 4:06am EDT
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By Andy Bruce

LONDON (Reuters) - Dwindling new orders and faster layoffs marked a worsening decline for euro zone companies last month, according to business surveys that dent hopes the economy will return to growth before 2013.

Wednesday's purchasing managers indexes (PMIs) suggested it was almost inevitable the euro zone returned to recession in the third quarter.

A good gauge of economic growth, Markit's Eurozone Composite PMI fell to 46.1 in September from 46.3 in August.

While revised up slightly from a preliminary reading two weeks ago, the index has been stuck below the 50 mark that divides growth and contraction for all but one of the last 13 months.

Order books shrank last month at the fastest pace in more than three years, while firms cut staff at the fastest pace since January 2010.

Overall, the surveys suggested aggressive action from the European Central Bank over the last two months has yet to lift the real economy in any meaningful sense.

"Rather than clearing, the cloud of uncertainty hanging over business investment and spending got notably darker in September," said Chris Williamson, chief economist from Markit, which compiles the data.

"There therefore seems little scope for a return to growth in the fourth quarter."   Continued...

A worker cleans windows on a building in London January 5, 2011. REUTERS/Stefan Wermuth