Eurozone economic growth nearly halted in September after business activity growth across the 19-nation bloc unexpectedly declined as the German manufacturing sector observed the sharpest decline since mid-2009.
The IHS Markit flash PMI composite output index for the eurozone fell to 50.4 this month from 51.9 in August, marking the weakest expansion of output across manufacturing and services in more than 6 years. The consensus estimate of economists polled by Econoday was for a 52.0 print.
The downturn in the factory sector deepened as the manufacturing PMI output index fell at the sharpest pace since 2012, to 46.0 from 47.9. A reading below the 50-point mark points to a contraction.
The manufacturing sector's weakness showed signs of spilling over into services companies, with the flash services PMI activity index declining to an 8-month low of 52.0 from 53.5 as new business inflows into the sector dried up.
"The details of the survey suggest the risks are tilted towards the economy contracting in coming months," said Chris Williamson, chief business economist at IHS Markit, citing new orders for goods and services falling at the fastest rate since the middle of 2013.
"With survey data like these, pressure will grow on the [European Central Bank] to add to its recent stimulus package," Williamson added.
Nordea Markets Senior Analyst Tuuli Koivu expects another rate cut from the central bank in December and an expansion of the asset purchase program.
In Germany, the flash PMI composite output index dropped to 49.1 in September from 51.7 in August, marking its first reading below the 50-point mark since April 2013. The rate of decline was also the sharpest in nearly seven years.
The data set signals that the German economy might not see any growth before the end of the year, IHS Markit principal economist Phil Smith said. There are concerns that Europe's biggest economy could slip into recession.
The German manufacturing PMI index dropped to 41.4 from 43.5, signalling the sharpest decline in business conditions across the goods-producing sector since the financial crisis in mid-2009.
In France, the composite output index declined to 51.3 from 52.9.
The euro lost nearly 0.4% versus the dollar around 5:06 a.m. ET.
