Business activity growth in the eurozone stalled in September, driven by weakness in the manufacturing sector, as German output slipped into contraction territory for the first time since April 2013.
The final Composite Output Purchasing Managers' Index declined to 50.1 in September, the lowest reading since June 2013, from 51.9 in August, data from IHS Markit showed. A reading above 50.0 indicates expansion.
The latest print came in below the preliminary estimate and the Econoday estimate, both at 50.4.
A decline in new work, driven by weakness in export trade, weighed on overall private sector business activity, the survey noted.
The goods-producing sector experienced its sharpest fall in output in nearly seven years. The services activity index declined to 51.6, and while it remained above the crucial no-change 50 mark, the pace of growth was the weakest since the start of the year.
In Germany, the composite PMI came in at 48.5 in September, lower than 51.7 in August and the preliminary estimate of 49.1. The rate of contraction was the sharpest in nearly seven years.
Meanwhile, the French composite index slid to 50.8 in September from 52.9 in August, trailing the prior estimate of 51.3.
The weakness in the manufacturing sector is spreading to the services sector, said Chris Williamson, chief business economist at IHS.
"The growing risk of recession, coupled with a further moderation of inflationary pressures, will add to expectations that the [European Central Bank] will need to do more to stimulate the economy in coming months."
ECB President Mario Draghi repeated calls for eurozone countries to step in with fiscal policies that back the central bank's stimulus package, saying such a combination could lead to a faster return to higher interest rates.
