Euro area manufacturing and service sector activity hits 20-month low

Output from the euro area's manufacturing and services sectors fell to a combined 20-month low in September, according to the results of one of the most widely-followed surveys.

IHS Markit's composite purchasing managers' output index for the single currency bloc slipped from 52.9 in August to 52.6, pointing to the slowest pace of activity since January 2015.

Significantly, the average reading for the composite PMI dipped to 52.9 in the third quarter from the 53.1 reading for the prior three months.

That, the survey compiler said, "suggested that the economy is losing, rather than gaining, momentum."

The service sector PMI fell from 52.8 to in August to 52.1 (consensus: 52.8), hitting a 21-month low.

In parallel, an equivalent measure for the manufacturing sector improved unexpectedly to reach 52.6 (consensus: 51.5) - a three-month high - versus 51.7 in August.

Commenting on the data, Rob Dobson, senior economist at IHS Markit, said: “The eurozone economy ended the third quarter on a disappointing note, with its rate of expansion easing to a 20-month low in September. While the underlying picture remains one of sluggish growth of close to 0.3% over the quarter as a whole, it also remains clear that the economic upturn is still fragile and failing to achieve any real traction. Job creation is wavering as a result, with employment rising at the slowest pace since April.

“With inflationary pressures also still relatively benign and business confidence at service providers dipping to a 21-month low, the door remains open for policymakers to provide further policy support later in the year if they see economic conditions moderate further."