Eurozone growth slows below expectations in October – PMI

Eurozone preliminary Composite PMI Index, which tracks performance of both Manufacturing and Services sectors, fell to 51.9 in October (the lowest since July) from 53.1 in September and undershot 52.7 consensus.

Significant growth slowdown in the bloc’s private sector was mainly driven by increased price pressures on surging energy prices, as situation in Ukraine and the Middle East worsened and deteriorating financial and political situation in France that prompted contraction in French business activity, sending the shockwaves across the union.

Separate report showed that private sector growth also softened in Germany, Europe’s largest economy.

Recent economic reports signal that input costs in the EU accelerated for the second consecutive month due to higher energy, fuel and transport costs, although companies raised their selling prices at a slower pace than in September, partially compensating for a negative impact.

Business confidence in the Eurozone fell to the lowest in five months, with sharpest drop seen in manufacturing.

Other surveys showed that union’s new orders, a key gauge of demand, grew at their slowest rate in four months, while rise in new export orders for the third consecutive month, after a longer period continuous weakness, brings a dash of optimism.

Despite weak economic data, economists remain cautiously optimistic and hope that second round impact after the economy was hurt by surging oil prices will not be significant.