FT Alphaville " Passably Miserable Indices It's eurozone composite PMI time. Headline: Predictably poor. Markit's final eurozone composite fell to a four-month low of 46.1 in September, little changed from 46.3 in August, but slightly above the earlier flash estimate of 45.9. Business activity and new orders both continued to fall, job losses rose, and the rate of cost inflation moved higher. From Chris Williamson, Chief Economist at Markit (our emphasis): It seems inevitable that the region will have fallen back into recession in the third quarter. After falling by 0.2% in the second quarter, a steeper fall in output is likely for the third quarter... Rather than clearing, the cloud of uncertainty hanging over business investment and spending got notably darker in September. Business confidence in services deteriorated further... At the same time, consumer spending will be hit by the deteriorating labour market. Jobs are also now being lost at the fastest rate since the start of 2010 as companies seek to adjust to falling demand and rising costs. There therefore seems little scope for a return to growth in the fourth quarter. The uncertainty is perhaps whether policy makers will be able to induce an improvement in business and consumer confidence to help ease the rate of decline, or whether the pace of downturn will accelerate further towards the end of the yea The services business activity index also fell to 46.1 in September, down from 47.2 in August and its lowest level since July 2009. While there has been some real divergence across countries. First, some real live actual good news: Ireland bucked the trend and was the only nation to report an increase in overall economic activity, with its rate of growth hitting a near one-and-a-half year high of 53. That was backed up by its fastest rise in services activity since February 2011 as services employment increased slightly - the first indication of job creation since March. Second chart from Scotty Barber Middling news: Germany edged closer to stabilisation, but nonetheless saw output fall for a fifth straight month. Italy saw a steep drop in activity, although the rate of decline eased to a six-month low. UK services activity continued to expand, although it dropped slightly to 52.2 in September from August's 53.7 - that's its twenty-first successive month above the 50 no-change mark. Markit estimated the reading was consistent with underlying GDP growth of around 0.1 per cent quarter on quarter. ING's James Knightley argued that in reality it is going to be higher - probably closer to 0.4 to 0.5 per cent on the back of a technical bounce relating to working day effects. Some bad news to temper the middling-news glow: German employment in services fell at its fastest pace since May 2009, while firms reported the most pessimistic business outlook for three-and-a-half years. And UK service sector employment dropped for the first time in ten months. For the first time since March 2009, eurozone service sector companies reported that (on average) they expect business activity to be lower in one year's time. Part of the reason for companies" negative outlook is the ongoing weakness of demand. September saw new business decline for the thirteenth month running, and at the quickest pace since mid-2009, according to Markit. Plain bad news: The month-on-month decline in the level of the French output index was among the sharpest in its history and Spain sunk to a four-month low. The rates of contraction in services in France and Spain were the steepest since October 2011 and November 2011 respectively. Related links: US PMI bucks global trend - FT Alphaville China manufacturing remains sluggish - FT This entry was posted by David Keohane on Wednesday, October 3rd, 2012 at 10:17 and is filed under Uncategorised. Tagged with eurozone, PMI.