Eurozone October PMI Cuts Feed Worries About Fourth-Quarter Growth

A weaker-than-expected turnout from the French services industry led Markit Friday to cut its composite eurozone purchasing managers' index in October from its initial estimate.

Markit said the eurozone composite index came in at a 10-month high of 53.3, down from the 53.7 predicted in Markit's "flash" estimate but up from 52.6 in September. Markit cut the index for the services sector to 52.8 from 53.5 as French service growth disappointed, with that index coming in at 51.4, down from 53.3 in September. Despite the revision downward from the initial estimate, the overall eurozone services index rose from September, when it came in at 52.2.

Germany fueled the expansion in the composite and the services indices in October, with the Spanish composite index also rising month on month. But Markit 's Chris Williamson said Italian growth appears to "have almost ground to a halt" ahead of December's constitutional referendum, with Irish growth slowing sharply amid Brexit worries.

He said the data points to static fourth-quarter eurozone GDP growth of 0.3%, with the German economy expanding by 0.5% and Spain by 0.6% to 0.7%.

"The weaker than previously indicated expansion in October raises doubts about whether the eurozone is breaking out of the sluggish growth phase seen throughout much of this year" despite the European Central Bank's stimulus efforts, he noted.

The final estimates of the two indices came after Markit on Wednesday said its eurozone manufacturing sector PMI rose to a 33-month high of 53.5 in October, above its initial 53.3 forecast and up from 52.6 in September.

The euro was recently down 0.14% against the dollar, buying $1.1090. The yield on the 10-year German government bond was down 1 basis point at 0.14% and the Euro Stoxx 600 index was down 0.96% at 328.39.

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