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Slowing Europe increases pressure on ECB

Monday, October 05, 2015 - 01:38

Euro zone business activity grew at its weakest pace in four months during September. But as Sonia Legg reports, surveys show one encouraging sign for the European Central Bank - service firms raised prices for the first time in four years.

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Prices are up in the euro zone's important service sector for the first time in four years. Good news for the European Central Bank, which is worrying about low inflation. But there was disappointing Markit data too - business activity grew at its weakest pace in four months during September. Composite PMIs for the service sector saw a similar dip, pointing to third-quarter growth of just 0.4%. ETX's David Papier says the euro zone is stagnating (SOUNDBITE) (ENGLISH): DAVID PAPIER, TRADER, ETX, SAYING: "We're seeing global growth problems all over the world, we are seeing falling oil prices, we are seeing wage growth that isn't growing as much as expected. We are seeing a lack of job growth within certain regions - these are all compounding the problems." Britain's economy is also losing steam after outpacing the euro zone in recent months. Its service industry saw growth at a two and half year low. That's likely to rattle the Bank of England which meets this week to discuss interest rates. That's a key subject for the Fed too, of course. But while both are considering when it's best to increase rates - the ECB could go the other way. (SOUNDBITE) (ENGLISH): DAVID PAPIER, TRADER, EXT, SAYING: "Despite unprecedented ECB stimulus and substantial currency depreciation the manufacturing sector is falling, it is failing to achieve significant growth momentum so we could potentially see more stimulus." Euro zone retail sales were unchanged in August from July. And France won the prize for the most encouraging overall composite PMIs. But even here there were worries. Service companies reduced staff at their fastest pace in 10 months and business expectations were at their lowest for nine months.

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Slowing Europe increases pressure on ECB

Monday, October 05, 2015 - 01:38