The eurozone economy probably maintained its 0.4 percent rate of expansion in the third quarter and will continue to grow amid rising orders and backlogs of work, according to Markit Economics.
While a purchasing managers’ index for manufacturing and services slipped to 53.9 this month from 54.3 last month, the third-quarter average stood at the highest level in more than four years, according to a report published yesterday.
New orders grew at the fastest rate in five months and a gauge for the amount of raw materials bought by manufacturers stood at a 19-month high, signaling increasing production in the coming months.
“In a word: resilience,” London-based RBC Europe economist Timo Del Carpio said. “We’re still seeing survey indicators coming through that are pointing to fairly robust momentum in the third quarter, despite lingering uncertainty over both domestic and external demand backdrop.”
With Germany leading the region’s recovery and France showing signs of faltering, the European Central Bank (ECB) has held out the prospect of more stimulus if the economic revival does not prove strong enough to boost consumer prices and reduce unemployment. After six months of quantitative easing (QE), the ECB earlier this month cut its growth and inflation forecasts through 2017.
German manufacturers and services providers stepped up hiring this month as order growth accelerated and backlogs of work rose the most in more than four years. That is pointing to an “increasingly sustainable-looking upturn,” the report said.
While growth in both industries accelerated in France, its economic recovery continues to be lackluster, as companies cut jobs in a push to cut capacity and raise productivity, Markit Economics said.
“The ECB would no doubt like to see more bang for their euros as far as stimulus from their QE program is concerned, but it’s debatable whether these numbers are weak enough to convince the central bank to take more aggressive action just yet,” London-based Markit Economics chief economist Chris Williamson said.
A eurozone gauge for manufacturing fell to 52 from 52.3 and a measure for services declined to 54 from 54.4, the report showed.
Average selling prices were largely unchanged this month, as charges levied for services rose for the first time in four years, while factory-gate prices dropped for the first time in six months.
Backlogs of work rose to the highest level since 2011, signaling firms might seek to boost capacity to meet growing demand.
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