Euro recovery losing steam: purchasing index

(BRUSSELS) - Growth signals across the 16-nation eurozone economy slumped to an eight-month low point in October with a leading indicator pointing on Thursday to a further slowdown in coming months.

Recovery in the 16-nation eurozone "lost further impetus" as the big two economies of France and Germany lead a rebound but others dragged behind, according to the purchasing managers' index (PMI), a survey of 4,500 euro area companies compiled by London-based data and research group Markit.

Its combined manufacturing and services index for October fell to an eight-month low of 53.3 points in October, down from 54.1 in September.

The data is watched closely as an important guide to underlying short-term trends in the economy.

"Business activity rose at the slowest pace since February," Markit said, "as a faster rate of expansion in manufacturing production was offset by weaker growth of business activity at service providers."

While the manufacturing upturn was welcome, the service sector slide raised concerns that domestic demand "remains disappointingly lacklustre", said Markit's chief economist Chris Williamson.

"The region's near-term fortunes therefore seem to be increasingly reliant upon growth of global demand," he added.

Germany saw its rate of expansion improve for the first time for three months while national strikes caused growth in France to ease to the weakest point since September 2009.

Italy and Ireland saw modest expansion but activity fell for the second consecutive month in Spain and Greece faced its fastest manufacturing decline since June.

But improvements in manufacturing "was offset by the weakest rise in the service sector new business since February".

While October employment figures rose for the eighth month running, job creation was mainly centred on Germany and France with further job losses in Italy, Spain and Ireland.

"Divergent national economic trends also suggest that peripheral countries such as Spain are showing signs of failling back into recession, which will raise tensions in the region and subdue overall economic growth for some time," Williamson said.