Eurozone Growth at Two-Year Low in October

07 November 2007

HENLEY-ON-THAMES, UK: Despite slowing growth in Germany, Spain and Italy, the overall growth rate within the Eurozone held steady in October, albeit at a two-year low. So concludes the latest monthly Report on Eurozone from the Royal Bank of Scotland and NTC Research.

The zone comprises the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area.

The headline Eurozone Composite Output Index (combining data both from the manufacturing and service sectors) registered 54.7 in October, to signal a rate of increase unchanged on the 23-month low seen in September.

A recovery in services activity from September's 25-month low was offset by a sharp slowdown in manufacturing growth to a 26-month nadir.

Services consequently recorded the faster rate of increase, outpacing that of manufacturing to the greatest extent for over two years.

Key findings from the October 2007 report are . . .

  • New Business
    Growth of new business improved only marginally on September's 25-month low, running well below the pace seen prior to September's record slowdown. A small improvement in growth in the service sector was in part offset by a marked deterioration in growth in manufacturing to near-stagnation.

  • Employment
    Employment rose for the twenty-sixth successive month. The rate of increase slipped further from July's six-and-a-half year high to a six-month low. Growth of service sector employment remained robust, but the rate of job creation weakened to a 19-month low in manufacturing. Employment rose in all big-four nations, though the rate of increase in Germany continued to far outstrip that seen in France, Italy and Spain.

  • Input Price Inflation
    Input price inflation remained below the average seen for the year to date. Input cost inflation in services picked up to a 17-month high but slowed to a 26-month low in manufacturing as high oil prices were offset by falling prices for other commodities.

  • Output price inflation
    This eased to a 21-month low, slowing for the fourth successive month. An 11- month low was seen in services and a 21-month low in manufacturing.
The data are currently based on the results of surveys carried out in Germany, France, Spain, Italy, Austria, Ireland, Greece and the Netherlands (plus the UK, Poland and the Czech Republic for the EU data), covering over 6,000 manufacturing and services companies. These countries together account for an estimated 92% of total Eurozone gross domestic product.

The questions asked relate to real events and are not opinion based. For further information on the report click here.

Data sourced from NTC Research (UK); additional content by WARC staff