Eurozone recovery dips as concerns over Spain return

The eurozone economy managed to maintain a lacklustre economic recovery in September, according to new survey figures published this morning (5 October), despite orders coming in at a slower pace and fewer jobs being created.

Business activity grew at its weakest pace in four months during September, with Markit's economy-wide purchasing managers' index (PMI) slipping to a score of of 53.6 in September from 53.4 in August. Despite the slump, the PMI is above the 50 level, meaning business activity expanded over the month.

Spanish concerns

Concerns were also raised over Spain's economic health after its economy-wide PMI fell to 55.1 from 59.6. The figures point to the country's slowest growth so far in 2015. Although Spain has grown about twice as fast as the eurozone average this year, it has not yet reached its pre-recession economic levels.

"The rest of the year will be crucial in determining whether the Spanish economy continues to improve or eases back towards stagnation," said Andrew Harker, senior economist at Markit.

Disappointing data for the ECB

The data is likely to disappoint policymakers less than six months after the European Central Bank (ECB) rolled out its €1.1 trillion (£810bn, $1.2bn) quantitative easing programme.

"The failure of the economy to pick up speed over the summer will be a disappointment to the ECB, especially with job creation sliding to an eight-month low," said Chris Williamson, Markit chief economist.

One encouraging sign for the ECB, however, is that consumers' purchasing power is getting a serious boost from deflation and very low inflation for the first time in four years.

Indeed, eurozone inflation turned negative in September, falling to -0.1%, according to figures published by Eurostat. The official statistics body explained prices had dropped from 0.1% in August.