Europe News

Euro zone business activity hits 10-month low


Business activity in the euro zone fell to a 10-month low in September as the downturn in two of the region's biggest economies - France and Italy - continued.

Markit's composite Purchasing Managers' Index (PMI), which combines activity in the manufacturing and services sector, fell to 52.0 from 52.5 in August.

The average reading for the third quarter as a whole - 52.8 - was also the lowest so far in 2014.

Gonzalo Arroyo Moreno, Getty Images

The euro hit an intraday low following the news.

France saw marked declines in both manufacturing and service sector activity. By comparison, the contraction in Italy was centered on the service sector, with manufacturing expanding, Markit said on Friday.

"The PMI suggests the euro zone economy remained stuck in a rut in the third quarter. After GDP stagnated in the second quarter, we can only expect modest growth of 0.2-0.3 percent in the third quarter, based on these survey readings, with momentum being lost as we head into the final quarter of the year, " Markit Chief Economist Chris Williamson said in a news release.

Williamson pointed to "pockets of growth" in the euro zone, including in Ireland and Spain, and in the Germany service sector.

"But the overall picture is one of a euro area economy that is struggling against multiple headwinds," Williamson said.

These include a lack of domestic demand in many countries, subdued bank lending, an ban by Russia on certain European imports and a reluctance of companies to expand in the face of an uncertain economic outlook.

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