Euro area business activity grew in September at the lowest rate seen so far this year, according to the preliminary flash PMI survey data. The Markit Eurozone PMI Composite Output Index came at 52.3 in September, down from 52.5 in August. It fell for a second month running, dropping to its lowest since December of last year. At 52.9, the average quarterly reading for the three months to September was also the lowest so far this year. 

Inflows of new orders rose only modestly, with the rate of increase waning for the third successive month to register the smallest monthly improvement since August of last year. Employment was largely unchanged once again as companies held back from hiring extra staff due to the weak sales growth. Although payrolls have risen in each of the past six months, gains have been only marginal at best.

With backlogs of work falling in September at the steepest rate since July of last year, the survey suggests companies will continue to have little need to boost payroll numbers in October. Inflationary pressures remained subdued in the face of weak demand. Companies' selling prices fell again, albeit only marginally, while input costs rose at the weakest rate since May.

Chris Williamson, chief economist at Markit said, "The survey paints a picture of ongoing malaise in the eurozone economy. With growth of output and demand slowing, employment once again failed to show any meaningful increase. Such torpor meant prices continued to fall as firms fought for customers, which will inevitably heighten concerns that the region is facing deflation. 

For a central bank hoping that the economic data flow will start to improve, the ECB will be disappointed by the ongoing weakness of the PMI. The survey data suggest GDP is on course to grow by 0.3% at best in the third quarter, buoyed by a 0.4% expansion in Germany but dragged down by stagnation in France and sluggish growth in the rest of the region."