The eurozone economy is still expanding, but only feebly, according to a private sector report released on Thursday that provided further confirmation that the region’s fragile expansion was only slightly better than outright stagnation.
The report, based on a survey of purchasing managers this month by Markit Economics showed that output barely rose in services and manufacturing.
Markit said its Composite Output Index slipped to a reading of 52.8 for this month, from 53.8 last month. It was the 14th consecutive month that the figure exceeded 50, a level that signals expansion, but it was also the weakest showing for this year so far. Markit said the pace was consistent with growth in the eurozone’s GDP of just 0.3 percent.
The economy in the 18-country currency bloc was already running out of gas in the second quarter, according to a report last week from the EU’s statistics agency Eurostat. That report showed that the eurozone economy did not grow at all in the second quarter from the first three months of the year, as Germany and Italy contracted and France was stagnant.
The area’s economy “remains too weak to encourage companies to take on staff in sufficiently large numbers to have a meaningful impact on unemployment,” Markit economist Rob Dobson wrote of the latest figures. “August saw job creation slow to near-stagnation.”
Nearly six years after the collapse of Lehman Bros, the eurozone has still not been able to break the legacies of the global financial crisis and the run on euro sovereign debt that followed it. With the economy being held back by the weight of more than 18 million unemployed and with credit contracting, the European Central Bank has come under pressure to address the growing threat of deflation.
The central bank in June cut its benchmark interest rate target to just 0.15 percent, and announced other measures, including negative rates on deposits held by financial institutions at the bank.
However, with recognition growing that monetary policy can do only so much, there have also been calls, including from Italy and France, for more leeway to use fiscal policy to restore demand — in contradiction of EU rules on government spending.
French President Francois Hollande conceded in an interview published on Wednesday that France, the eurozone’s second-largest economy after Germany, could no longer expect to reach its deficit-reduction targets this year and called for the EU to make growth its primary priority.
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