Euro zone businesses start Q2 with tepid growth: Polls

LONDON • Euro zone businesses started this quarter on the back foot, with growth unexpectedly slowing again as demand barely rose despite more modest price rises, surveys showed yesterday.

The data comes a week after European Central Bank president Mario Draghi raised the prospect of more support for the struggling euro zone economy if its slowdown persists.

IHS Markit's Flash Composite Purchasing Managers' Index (PMI), considered a good guide to economic health, fell to 51.3 this month from a final March reading of 51.6, confounding the median expectation in a Reuters poll of a rise to 51.8.

"It's still not in recession territory by any means but is pointing to rather subdued... economic growth, and this is reflected in the gloomy expectations," said chief business economist Chris Williamson of IHS Markit.

Mr Williamson said the PMIs, if maintained, indicated second-quarter gross domestic product growth of just under 0.2 per cent, below the 0.3 per cent predicted in a Reuters poll earlier this month.

As new business barely increased this month - the sub-index nudged up to only 50.6 from 50.5, close to the 50 mark dividing growth from contraction - an imminent turnaround is unlikely.

The downturn was again led by the bloc's manufacturing industry. While its PMI rose to 47.8 from March's 47.5, it spent its third consecutive month below the break-even mark.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 19, 2019, with the headline 'Euro zone businesses start Q2 with tepid growth: Polls'. Print Edition | Subscribe