month low amid French turmoil
Euro zone private sector growth slowed to a four-month low in October, driven by rising energy costs and economic contraction in France. The S&P Global flash PMI data indicates that inflationary pressures and political instability are dampening business confidence and hiring across the region.
Why it matters
The slowdown suggests that the European Central Bank may face increased pressure to tighten monetary policy, while the economic instability in France poses risks to broader euro zone financial stability.
Growth across the euro zone's private sector slowed to its weakest pace in four months in October, driven by an energy-driven rise in costs and a renewed contraction in France amid political and financial pressures, a survey showed today.
The S&P global flash euro zone Composite PMI Output Index fell to 51.9 in October from September's 53.1, its lowest reading since June and lower than all forecasts in a Reuters poll which had predicted a modest dip to 52.7.
"Key to the broader slowdown is the further escalation of inflationary pressures seen during the month," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"Input costs are rising sharply again, the rate of increase surging in manufacturing on the back of higher energy prices, causing firms to push selling prices higher in order to protect margins," he said.
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