Services PMI Less Weak Than Feared, But Demand Poor Overall

The Eurozone September flash composite PMI was 47.1 (vs 46.7 prior; 46.5 expected). Services printed at 48.4 (vs 47.9 prior; 47.6 expected) while manufacturing was 43.4 (vs 43.5 prior; 44.0 expected). Of particular note was the better than expected services print which followed the unexpected uptick in Germany's figures earlier, offsetting a French miss. Key comments from the release are:

• "Central to the latest reduction in business activity was a further deterioration in customer demand, as highlighted by a fourth successive monthly decrease in new orders."
• "New export orders declined even more quickly than total new business in September."
• "Although on balance firms continued to predict a rise in activity over the coming 12 months, sentiment dipped to the lowest since November last year."
• "As well as scaling back staffing levels, manufacturers in the eurozone also cut their purchasing activity sharply." - "Input costs increased at the fastest pace in four months"…"Inflation was driven by the service sector, where prices were up sharply amid higher wages and rising fuel costs."
• "Despite the steeper pace of input cost inflation, a weakening demand environment meant that companies increased their selling prices to a lesser extent than in August."