LONDON – The 19-country eurozone economy is growing steadily but there’s no sign of any marked lift-off, a key survey showed Wednesday in another development that’s likely to pile pressure on the European Central Bank to expand its stimulus next month.
In its monthly survey of economic conditions around the single currency bloc, financial information company Markit said its composite purchasing managers’ index — a broad gauge of economic activity encompassing both the manufacturing and services sectors — rose to 53.9 points in October from the four-month low of 53.6 in September.
Anything above 50 indicates expansion and, according to Markit, October’s figure points to quarterly growth of 0.4 per cent.
That’s on a par with recent quarters but doesn’t amount to much — around 1.6 per cent on an annualized basis, which is markedly lower than the rate of growth the U.S. economy has experienced for much of the past few years and not enough to lower unemployment rates across the eurozone quickly.
“The pace of growth looks set to remain frustratingly weak given the amount of stimulus in play at the moment,” said Markit’s chief economist Chris Williamson.
Of the four big eurozone countries, Markit found that Spain, which has the second-highest level of unemployment in the region after Greece and which is set for a general election next month, is experiencing the highest rate of quarterly growth at around 0.7 per cent. Germany is close behind at 0.4 per cent and Italy is at 0.3 per cent, with France lagging at 0.2 per cent.
The survey also showed subdued inflation within the eurozone. That’s the issue most concerning policymakers at the ECB and which is expected to lead them to boost the stimulus program in December. The ECB is currently buying 60 billion euros ($66 billion) worth of bonds in the markets in an effort to get inflation back toward its target of just below 2 per cent. In the year to October, inflation was zero.