Euro zone business growth slowed this month as Asian demand weakened, leading to fewer new jobs and forcing factories to reduce output, even though companies raised prices for the first time in over four years. David Pollard reports.
Euro zone business might say it's growing nicely, thank you - but not quite as nicely as last month. The latest composite reading has eased back on weaker Asian demand - China seen in the frame there. That means fewer new jobs and has forced some factories to reduce output. But it could be worse, says Peter Dixon of Commerzbank. (SOUNDBITE) (English), GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: ''they're getting the offset of lower commodity prices which will lower import costs and boost real incomes throughout the overall economy, so net net I rather suspect the impact of the Chinese slowdown will be in the order of a couple of tenths of GDP rather than anything more significant. '' Fear of a rapid cooling in the Chinese economy spooked markets last month - stocks and commodities both fell sharply. Today's PMI numbers, say their compilers, Markit, point to third-quarter euro zone GDP of 0.4 percent. In its words, ''not runaway growth by any means''. France, too, is still a worry - its manufacturing PMI perked up this month after two negative readings. But its growth rate has been confirmed as flat in Q2. (SOUNDBITE) (English), GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: ''France has a lot to do over the course of the next few years in order to put in place the reforms which are going to boost growth and reduce unemployment, which currently remains very high.'' The new numbers came as Mario Draghi prepared to field questions from members of the European Parliament. Chief of which: is his QE asset-buying policy proving as effective as he hoped in boosting euro zone inflation? One good piece of PMI news for him, though: service firms raised their prices for the first time in four years.