Euro zone business growth at slowest since start of 2015 -PMI

By Jonathan Cable

LONDON (Reuters) - Euro zone business growth was at

its weakest since the start of last year in August, suggesting

the bloc's already struggling economy is losing what little

momentum it had, a survey showed on Monday.

To add to policymakers' concerns, the slowing came as firms

offered deeper discounts despite rising input costs.

Markit's final composite Purchasing Managers' Index for the

region was 52.9 in August, below a flash estimate of 53.3 and

July's 53.2. That was its lowest since January 2015 but it has

been above the 50 mark that divides growth from contraction

since mid-2013.

"While the overall picture is one of steady but sluggish 0.3

percent growth in the third quarter, the revised figures

indicate that the economy is losing rather than gaining

momentum," said Chris Williamson, chief business economist at

IHS Markit.

If realised, that growth forecast would match the median

prediction in an August Reuters poll.

The European Central Bank will keep policy unchanged on

Thursday but respond to pressure for further easing and announce

an extension to its asset purchase programme by the end of this

year, according to a Friday Reuters poll of economists.

At just 0.2 percent in August inflation is nowhere near the

ECB's 2 percent target ceiling and the composite output price

fell to 49.3 last month, under July's 49.8.

"Inflationary pressures are also cooling amid intense

competition. The survey data will fuel expectations that the ECB

would prefer not to wait before injecting more stimulus into the

economy," Williamson said.

Growth in the bloc's dominant service industry also waned.

Its PMI was 52.8, matching June's 17-month low and below July's

52.9 and flash estimate of 53.1.

With the outlook somewhat bleak, optimism among service

firms was at its gloomiest since late 2014. The business

expectations index registered 60.7, down from 60.9 in July.