business activity has expanded at its weakest rate this month since the start of 2015 as growth paths diverged and firms stopped discounting for the first time in a year, surveys showed on Friday.
Markit's composite survey showed a big split between buoyant manufacturers
and a struggling service sector, and a similar divide in growth rates among members of the currency union: French business activity hit a 15-month high, while Germany's private sector
growth slowed to a 16-month low.
The euro zone
flash composite Purchasing Managers' Index (PMI), seen as a good overall growth indicator, fell to 52.6 from August's 52.9. Readings above 50 indicate growth, but it was still the lowest figure since January 2015.
A Reuters poll of economists had predicted only a slight dip to 52.8.
"They (PMIs) rather confirmed the expectations that moderate but stable growth in the euro area has continued in the autumn," said Tuuli Koivu at Nordea.
Markit said the PMI
pointed to the bloc's GDP
expanding around 0.3 per cent this quarter, in line with a Reuters poll earlier this month that suggested economies stuck in low gear need fiscal policies rather than more monetary easing.
The European Central Bank
(ECB) has unleashed extraordinary stimulus in recent years but interest rates are probably close to the bottom, even though the bank had hoped the euro zone economy
would respond better, two top policymakers said on Friday.
Those years of ultra-loose policy have so far failed to get inflation anywhere near the ECB's 2 per cent target ceiling so policymakers may take some cheer from firms halting price discounting for the first time in a year.
The output price index rose just above the breakeven mark to 50.1 from 49.3.
"It does seem to be a very tentative hint at rising inflation though, meaning that it can still be a while to come before meaningful price growth will return," said Bert Colijn at ING.
Consumer confidence rose in August, official data showed on Thursday, and manufacturers
had a much better September than expected. Their PMI
climbed to 52.6 from 51.7, beating all forecasts in a Reuters poll, while an index measuring output rose to a nine-month high of 54.0 from 53.3.
The rally could continue into October, as new orders came in at a much faster rate. The sub-index leapt to 53.0 from 51.4.
covering the bloc's dominant service industry slumped to 52.1 from 52.8, its lowest reading since late 2014 and below all forecasts in a Reuters poll which had predicted no change.
Optimism among businesses in the industry also continued to slide with the expectations index falling to a 21-month low.
It was a similar mixed picture from Germany
and France, the bloc's two biggest economies and the only members to issue single-country flash PMIs.
Services lifted French business activity to a 15-month high while growth in Germany's private sector
slowed to a 16-month low, suggesting the powerhouse of the currency union may have lost momentum in the third quarter.
"It clearly throws a shadow on the so-far strong growth of the German economy," Koivu said.