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Mixed messages on EuroZone economy

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Further robust expansion is signaled for the start of the fourth quarter, with growth of new orders hitting a five-month high in September. Inflows of new business hit a five-month high in services and held close to August’s 16-month high in manufacturing. The amount of raw materials bought by manufacturers also rose at the fastest rate since February of last year in preparation for increased future production.

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said that “the September PMI surveys indicate a further steady expansion of the eurozone economy, but there remains a worrying failure of growth to accelerate to a pace sufficient to generate either higher inflation or strong job creation.

“The survey data indicate that the eurozone economy expanded 0.4% in the third quarter, in line with the second quarter. This is, however, below what’s generally regarded as its long-term potential growth rate and puts the economy on course to grow by just 1.6% this year.

“The ECB would no doubt like to see more bang for their euros as far as stimulus from their QE program is concerned, but it’s debatable whether these numbers are weak enough to convince the central bank to take more aggressive action just yet.

“France remains a particular concern. The PMI data signal 0.4% growth of the German economy in the third quarter, but a mere 0.1% expansion in France.”

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