Eurozone growth lowest in over a year Says Markit

Financial information company Markit has revealed in their latest purchasing manager’s index (PMI) that euro area growth is the lowest it has been for over a year.

In February this year business activity grew slower, and deflationary pressures also increased.

The PMI fell from 53.6 in January to 52.7 for this month, which is the poorest figure since January last year.

This was the second consecutive monthly slowing in the rate of output expansion, and reflected a wane in growth of new orders for a third successive month.

As outstanding business remained stagnant, firms limited their hiring of new staff, leading to the weakest net increase in employment for five months.

Manufacturing has also slowed according to Markit’s latest figures, to the smallest increase since December 2014.

As exports and new orders have faltered, the sector is now close to outright stagnation Markit said.

Services performed better, but growth still weakened to the most sluggish pace since January last year.

The survey also found that there was a sharp deterioration in optimism in the services sector, which points to a weak economic performance in the euro area in the coming months.

Deflationary Pressures Worsen

Markit also found in their survey that average prices charged by companies for their goods and services fell at their steepest rate for a year.

Average input costs fell marginally for a second successive month, the first back-to-back monthly decline since the spring of 2013.

Manufacturing costs also fell at a rapid rate, with purchase costs falling by the greatest extent since July 2009.

This was due to low commodity prices, and intense competition amongst suppliers.

The delivery times of suppliers, a key gauge of the level of capacity, pointed to the poorest supply chain pressures since July 2013.

Survey Shows National Divergences

Markit’s study also highlighted the differing paces that euro area economies are growing at, and there was a clear gap between France and Germany.

France saw a contraction in business activity for the first time since last January. New orders also fell in the French economy, and employment barely rose the research found.

In contrast, Germany saw output growth hold up relatively well, even though the pace of economic expansion was the worst it had been in seven months.

A rise of service sector activity, was countered by the shakiest rise on manufacturing output since November 2014.

Job creation in Germany also slowed to a ten month low, while the rest of the single currency area saw business activity rise at the weakest rate since February of last year.

Pound Falls Amid ‘Brexit’ Uncertainty

The UK pound has suffered its biggest fall in a year, in the aftermath of the referendum being called on whether Britain should remain or leave the European Union, to be decided on June 23.

Against the US Dollar, the pound is currently buying $1.41 this morning GMT, falling from the $1.43 in the early hours of today.

Compared to the euro, the pound is buying EUR1.28, and has fallen from buying nearly EUR1.295 yesterday.