There are more worries about the euro zone's economic recovery. As David Pollard reports, surveys show near-stagnation in German services put the brakes on overall private sector growth in September and euro zone business activity expanded at its weakest rate in almost two years.
As menus go, the latest PMI numbers aren't that tasty. Near stagnation in Germany's services hampering overall private sector growth in September. A reading of 50.9 still above the 50 level that denotes growth - but not by that much. The overall euro zone composite reading the weakest since early last year. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "The situation in the euro zone is still quite dire. We've still got very high levels of unemployment, we've still got low levels of confidence in many areas. There's plenty of countries that are still struggling to get access to credit. And I think we've just got to accept that we're in for a long period of quite low growth for the euro area." Strong new business helped Spanish services maintain solid growth. But Italy's services fell to 50.7 in September - its lowest since May. France's services improved but overall activity was still below a preliminary estimate. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "Stagnation in France continues to be an issue. The fact that they're so slow to implement the reforms that are so necessary has got to be a big concern, because you need your biggest economies to drive any significant recovery and Germany cannot do this on its own and France doesn't appear to be playing its part." And despite strong retail sales and record employment, Europe's biggest economy, Germany, is expected to lose steam. Some asking whether a recent upgrade by German institutes to a 1.9 per cent growth forecast this year is overdone. The German government is due to update its own forecasts on Friday.