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Financial News: Eurozone Private Sector Expands Notably On Orders

Eurozone Private Sector Expands Notably On Orders

10/24/2017 - 08:05:00 (RTTNews)

(RTTNews) - The euro area economy expanded strongly at the start of the fourth quarter on another marked improvement in new orders, but the pace of growth slowed from September.

The flash composite Purchasing Managers' Index fell more-than-expected to 55.9 in October from 56.7 a month ago, flash survey data from IHS Markit showed Tuesday. The score was forecast to drop marginally to 56.5.

After signaling a 0.7 percent increase in GDP in the third quarter, the pace of expansion looks to be staying around this mark as the year draws to a close, Andrew Harker, an associate director at IHS Markit, said.

While the drop in the composite PMI could point to a somewhat slower GDP growth in the last quarter of the year, it does seem that growth will remain healthy and that the economy could weather slower asset purchases by the European Central Bank, Bert Colijn, an ING economist, said.

Despite slowing, output growth remained sharp and broadly consistent with the trend seen over 2017 so far. Firms were buoyed by further strong new order inflows.

Moreover, rising workloads encouraged firms to take on extra staff at the sharpest pace in over a decade.

On the price front, companies posted the fastest rise in input costs in six months. Consequently, output price inflation accelerated for the third month running and was the sharpest since June 2011.

Data showed that the services PMI declined to 54.9 in October, while it was forecast to remain unchanged at 55.8.

Meanwhile, the factory PMI rose unexpectedly to an 80-month high of 58.6 from 58.1 in September. The reading was expected to decline to 57.7.

The big-two eurozone economies of France and Germany drove growth during October, comfortably outperforming the rest of the single-currency area.

France logged the sharpest rise in output since May 2011, while growth in Germany remained strong despite easing slightly.

France's private sector activity expanded at the fastest pace in nearly six-and-a-half years in October. The composite output index climbed to 57.5 in October from 57.1 in September.

The service sector activity rose to the greatest extent since March 2017. The services PMI increased to 57.4 in October from 57.0 in the preceding month.

Similarly, the manufacturing PMI climbed to a 78-month high of 56.7 in October from 56.1 in September.

IHS Markit said Germany's private sector maintained strong growth momentum with inflows of new orders rising at the fastest pace for six-and-a-half years.

Germany's composite output index fell to 56.9 in October from September's 77-month high of 57.7. Nonetheless, this was one of the highest readings seen since 2011.

The services Purchasing Managers' Index fell to 55.2 from 55.6 in September. The score was forecast to remain unchanged at 55.6.

Likewise, the manufacturing PMI came in at 60.5, down from 60.6 a month ago, but above the expected score of 60.0.

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