Survey finds eurozone recovery even more subdued than thought, with France and Italy lagging

LONDON—The economic recovery across the 18-country eurozone proved to be even more subdued than previously thought during September, with France and Italy the chief culprits, a closely-watched survey found Friday.

Financial information company Markit said its monthly purchasing managers’ index, a gauge of business activity, was at 52.0 points in September. That’s a 10-month low and down on the initial estimate of 52.3.

Though anything above 50 indicates expansion, the survey provides further evidence that the eurozone economy is crawling forward at best. Markit reckons the figures point to growth of 0.2 to 0.3 per cent during the third quarter. Though that would be an improvement from the zero growth recorded in the second quarter, economic activity is still way short of levels needed to make a dent in sky-high unemployment rates across the region.

Furthermore, Markit found a big disparity in economic performance across the region. In particular, it warned that the downturns in France and Italy, the eurozone’s number 2 and 3 economies, are getting more pronounced.

The two countries are often accused for being slow in reforming their economies to make them more competitive.

“The overall picture is one of a euro area economy that is struggling against multiple headwinds,” said Chris Williamson, Markit’s chief economist.

“These include a lack of domestic demand in many countries, subdued bank lending, sanctions with Russia and a reluctance of companies to expand in the face of an uncertain economic outlook.”

For all the disappointments, there are some bright spots, notably Ireland and Spain. Both economies have been at the forefront of the region’s debt crisis over the past few years. Germany, Europe’s biggest economy, also appears to have gotten over a mid-year hiatus.

Overall, though, Williamson said the subdued economic backdrop in the eurozone is likely to “apply further pressure” on the European Central Bank to go further in its efforts to stimulate the economy.