BCN-10 Trade war hits eurozone growth: Markit survey

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BCN-10

EU-EUROZONE-ECONOMY-INDICATOR

Trade war hits eurozone growth: Markit survey

BRUSSELS, Sept 22, 2018 (BSS/AFP) – Growth in the eurozone economy lost
steam in September as European factories saw diminished demand amid Brexit
tremors and the effects of a multi-front Trump trade war, a key survey showed
on Friday.

Data monitoring company IHS Markit warned that export growth was
“evaporating” in the 19-country single currency bloc, even though powerhouses
Germany and France continued to outperform.

The purchasing managers’ index (PMI) by IHS Markit fell to 54.2 in
September, which was lower than forecasts by analysts. A figure over 50
indicates the economy is expanding.

“A near stagnation of exports contributed to one of the worst months for
the eurozone economy for almost two years,” said Chris Williamson, Chief
Business Economist at IHS Markit.

“Trade wars, Brexit, waning global demand (notably in the auto
industry)… and rising political uncertainty both within the Eurozone and
further afield all fuelled the slowdown in business activity,” he said.

Markit said the slowdown was driven by the manufacturing sector as new
export orders failed to grow for the first time since June 2013.

The “softening” in the PMI “adds to evidence that the region’s economy has
lost some momentum after 2017’s very strong expansion,” said Jessica Hinds of
Capital Economics.

Still, “as the index is still consistent with a decent pace of growth, the
European Central Bank is unlikely to change its plans to normalise policy
very gradually,” she added.

This referred to the crisis-fighting stimulus programme that the
Frankfurt-based central bank is due to scale back until ending it outright in
December.

The dimmer outlook lines up with the bleaker outlook of the ECB which
slightly lowered its growth forecast for the eurozone for this year and 2019.

Amid the trade tensions as well as concerns about emerging markets, the
bank now expects growth of 2.0 percent in 2018 and 1.8 percent in 2019.

BSS/AFP/HR/0930