Eurozone growth slows as France returns to contraction

Eurozone business activity slowed more sharply than expected in October, with higher energy costs and renewed contraction in France weighing on growth, according to S&P Global’s latest survey. The slowdown also extended to Germany, where weaker services activity offset an improvement in manufacturing.

The survey’s composite activity index fell to 51.9 from 53.1 in September. A reading above 50 indicates growth, so the eurozone economy was still expanding, but at its slowest pace in four months. Economists had expected a reading of 52.7.

France returned to contraction in both manufacturing and services, reversing a September recovery that had lifted activity to its highest level in more than two years. S&P Global chief economist Chris Williamson said strikes and unrest in major French cities may have contributed to the weakness. He also said growth had eased slightly elsewhere in the eurozone.

Germany’s activity fell to a two-month low. Williamson identified rising inflation over the past month as the main factor behind the broader slowdown, while the survey report also linked higher business costs to energy prices amid the continuing war in the Middle East.