The eurozone's manufacturing sector reported lacklustre activity in September, set back by a fall in production by powerhouse Germany, a survey showed on Wednesday, adding to the clouds over the single currency zone. The latest survey of leading indicators from manufacturing industries in the Eurozone revealed a purchasing managers' index (PMI) reading of 50.3 points, down from 50.7 points in August - the lowest for 14 months.
The survey, by the Markit analysis group, is closely watched as a reliable indicator of future performance of manufacturing activity, and the new figures are likely to raise pressure on the European Central Bank to do more to avert deflation. The bank will hold a policy meeting on Thursday when it is expected to provide details of programs already under way to inject cash into the eurozone economy.
The bank is not expected to announce any new measures, but analysts will watch in case it hints at any extra action to come.
The latest Markit data for manufacturing sentiment was a second estimate and worse than the first estimate of 50.5 points. A reading of 50 marks the mid-line between signs of rising production or of decline, and the latest figures mean that the overall outlook has edged down in the month to almost stagnation level.
IHS Global Insight analyst Howard Archer said that there was little positive news in the latest manufacturing index and the outlook was worrying since order books had shrunk for the first time since June 2013. At Berenberg bank in London, economist Christian Schulz commented: "A down revision of the German manufacturing PMI in September overshadowed signs of stabilization elsewhere in eurozone manufacturing. Export-oriented manufacturers have suffered from the uncertainty caused by the crisis in eastern Ukraine and other geo-political risks, as well as the mixed performance in emerging markets and a slow recovery in the eurozone itself."
