Eurozone Business Growth Slows in September

Thursday’s survey showed that business in the eurozone grew at the slowest pace in five months in September, as measures imposed to combat the spread of the Delta strain of the Coronavirus hit demand, while restrictions on supply chains raised the cost of production to more than a two-decade high.

Despite a significant drop in infection rates, most of the remaining restrictions are unlikely to be lifted soon in major economies, including Germany and France.

The IHS Markit Composite Purchasing Managers’ Index, which is considered a good gauge of the economy’s health, fell to a five-month low of 56.1 in September from 59.0 in August.

Although the index reading is above the 50 mark that separates growth from contraction for the seventh month in a row, it came well below a Reuters poll that had expected a reading of 58.5.

A sub-index that tracks the cost of factors of production reached 70.5, the highest level in more than two decades.

This indicates that supply disruptions, one of the main reasons behind the price hikes around the world over the past months, are far from resolved and that high inflation will remain at least for a few months to come.

An index measuring expectations for the bloc’s dominant services sector fell to 56.3 in September from 59.0 in August, the lowest since May, also well below the median forecast in a Reuters poll of 58.5.

It is reported that consumer confidence in the Eurozone improved more than expected in September.