Eurozone Manufacturing at Weakest Point in Year

An upturn in export sales was one of very few bright spots in the October survey.

Eurozone manufacturing and service industries showed the weakest activity for 12 months in October, a survey of purchasing managers revealed on Oct. 21.

Activity slowed in both manufacturing and services, and "conditions deteriorated further in the region's periphery," despite "robust" business in France and Germany, the survey said.

The combined manufacturing and services index, compiled using results from interviews with 4,500 companies operating across the 16 countries that use the euro, fell to 53.4 from an upwardly-revised 54.1 in September.

Research group Markit, which produces the survey, said it was a third monthly slide in a row -- albeit any score above 50 indicates a trend towards growth and this marked a 15th successive month in positive territory.

Markit chief economist Chris Williamson said a "sharp deterioration in confidence for the year ahead" in the service sector was "likely to be met with a return to job cutting."

Recovery "appears to be increasingly dependent upon manufacturers, for whom an upturn in export sales was one of very few bright spots in the October survey," he underlined.

IHS Global Insight analyst Howard Archer said it would likely get worse through the combined effects of government cuts and pressure on exports through a slowdown in global recovery and the strong euro making eurozone products effectively more expensive.

But UniCredit economist Marco Valli still insisted that "risks of a double-dip recession at the area-wide level remain low given the strong support coming from Germany, where the recovery has reached the stage of full sustainability."

Copyright Agence France-Presse, 2010

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