Business activity in Eurozone remains volatile in October

Business activity in Eurozone remains volatile in October, as the dynamics was weak and economic recovery is losing momentum. The companies kept the prices for second consecutive month, despite that the costs increased by the steepest rate since July 2015. The broader Purchasing Managers’ Index (PMI) in Eurozone grew to 53.3 points in October from 52.6 points in September, but on first reading the value was calculated at 53.7 points. The index suggests that growth in the fourth quarter will be 0.3%.

The Eurozone economy continue to recover, but loses momentum. This shows that efforts of the ECB to stimulate the economy still are not working efficiently. Years of ultra-loose monetary policy has so far failed to get inflation anywhere near the central bank’s 2% target ceiling but the PMI showed input prices rose sharply, largely driven by higher staff costs and oil prices.

A stable but lackluster economic outlook will push the ECB to tweak its asset purchase program and announce by year-end an extension to it beyond March 2017.

However, should be noted that the PMI has been above the 50 points barrier, which divides growth from contraction, since mid-2013.

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