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
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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.