By Jeyhun Aliyev
The performance of the eurozone (EA19) manufacturing sector was subdued in September due to export orders stagnating for the first time in over five years, according to a report by London-based global data company on Friday.
The Eurozone Purchasing Managers’ Index (PMI) for the manufacturing sector stood at 54.2 in September, slightly down from August’s 54.5, said IHS Markit, while pointing to the second-lowest growth since November 2016.
"The slowdown was driven by weaker growth in the manufacturing sector, where production increased at the slowest rate since May 2016," the report read.
Germany and France were the strongest performing nations among the member countries.
"Elsewhere, growth improved only marginally from August’s 22-month low, rounding off the worst quarter for two years," the report noted.
The report said service sector output growth climbed for the second month in a row.
Meanwhile, job creation continued the upward trend that started in October 2007.
Chris Williamson, chief business economist at IHS Markit, said inactivity of exports contributed to "one of the worst months" for the economy in almost two years.
"Trade wars, Brexit, waning global demand (notably in the auto industry), growing risk aversion, de-stocking and rising political uncertainty both within the Eurozone and further afield all fueled the slowdown in business activity," he said.
Williamson also noted that the deceleration was limited to manufacturing.
He added the service sector was boosted by local demand being supported by strong job gains.
"However, with new orders and backlogs of work rising at much reduced rates compared to earlier in the year, export growth evaporating and future expectations remaining close to two-year lows, the risks to future growth appear tilted to the downside," Williamson said.
The PMI for the manufacturing sector is seen as an important gauge in tracking the health of the sector, with values below 50 points showing contraction while above indicates expansion.