According to data from a set of closely-watched market-moving indicators, the economic growth of E.U. member states has plummeted to its lowest level in 20 months, and the biggest loser has been Germany.
The Markit Purchasing Managers' Index (PMI) revealed that European Union growth fell to 52.7 on the gauge, a bottom that has not been seen since February last year.
The PMI showed that one of the biggest factors was the downturn in the financial bloc’s largest economy, Germany, as its production levels slumped to 15 month lows combined with a steep drop in its service industry.
Germany’s poor form has even seen its growth eclipsed by France for the first time in five years.
Sentiment for a positive upturn next year is also at a 20 month low, as is service sector expansion across the E.U.
One bright spot was manufacturing, which climbed to a quarterly peak, but it wasn’t enough to change the overall outlook of the E.U. which Markit say is on a downswing.
“It’s not the most encouraging end to the third quarter,” said a senior spokesman at CTI China Renaissance on the firm’s blog.
“The fragility of the economic expansion in the euro zone member states in general is of growing concern on the trading floors. Close to 0.4 percent growth on the PMI is not going to help build traction and it could hit sentiment hard in the coming few months. If manufacturing can remain strong then that would provide some kind of momentum,” he added.
The downswing is clearly having a negative effect on job creation as employment gained at its slowest rate since March. It’s widely believed by analysts that if the trend continues policymakers at the world’s most prominent central banks could provide further support packages towards the start of the holiday season.
Both the U.S. Fed and the Bank of Japan decided to leave interest rates unchanged in recent meetings.
