Eurozone Private Sector Stagnates In October
(RTTNews) - The euro area private sector stagnated in October as the contraction in manufacturing was offset by the services activity growth, final survey results published by S&P Global showed on Wednesday.
The HCOB composite output index registered 50.0 in October signalling no change in private sector output. The reading was up from 49.6 in September and above the flash score of 49.7.
The stagnation of the economy masked considerably different trends at the sector level. Services activity posted growth for a ninth straight month, while manufacturing production decreased solidly.
New work received by private sector firms shrank for a fifth consecutive month as a sharp fall in demand for goods was accompanied by the quickest drop in sales at services companies since January. The volume of outstanding business contracted as lower demand allowed firms to focus more resources on backlogged orders. Consequently, firms lowered their staffing capacity. The rate of job shedding was the quickest since December 2020.
Companies were less optimistic towards the 12-month outlook for business activity. Business confidence weakened for the fifth successive month and hit its lowest in the year-to-date period.
Input price inflation remained close to that seen in September and was the third-softest for nearly four years. Companies raised their prices charged but at the second-slowest extent since February 2021.
The survey showed that the currency bloc's two biggest economies, Germany and France continued to drag on the union's performance. France fell deeper into contraction, while Germany's downturn cooled.
Spain remained the fastest-growing country despite a slight loss of momentum. Italy reported a moderate upturn with a renewed expansion.
Germany's private sector shrank for a fourth straight month in October but it ticked up from September as stronger growth in services activity coincided with a slower fall in manufacturing.
The HCOB final composite PMI improved to 48.6 in October from 47.5 in the prior month and also stayed above the flash reading of 48.4. Similarly, the services PMI climbed to 51.6 from 50.6 a month ago. The initial estimate was 51.4.
France's private sector activity declined at the fastest pace since February. The composite output index fell to 48.1 in October from 48.6 in September. The flash score was 47.3.
Factory production as well as services activity both registered quicker declines at the start of the fourth quarter. The services PMI decreased to 49.2 in October from 49.6 in September but well above the flash level of 48.3.
Italy's private sector rose back into growth territory as growth in services more than outweighed a deeper contraction seen at manufacturers. At 51.0, the composite output index climbed from 49.7 in September. The services PMI posted 52.4, up from 50.5 in September.
Spain's private sector economy continued to perform strongly in October, with both manufacturing and service sectors expanding again. The HCOB composite output index fell to 55.2 from 56.3 in September. The services PMI posted 54.9 compared to 57.0 in the previous month.