Euro zone factory growth remains weak in October despite ECB stimulus: PMI

[November 02, 2015]  By Jonathan Cable

London, (Reuters) - The European Central Bank's massive stimulus program has done little to spur manufacturing growth in the euro zone, a survey showed on Monday, as factories again resorted to slashing prices to drum up trade.

More than half a year after the ECB started pumping 60 billion euros a month of new money into the bloc's economy through its quantitative easing program, the relatively downbeat survey may make disappointing reading for policymakers.

Markit's final manufacturing Purchasing Managers' Index was 52.3 last month, only slightly up from the September and

preliminary October reading of 52.0. It has, however, been above the 50 mark that separates growth from contraction for over two years.

An index measuring output that feeds into a composite PMI due on Wednesday and seen as a good guide to growth nudged up to 53.6 from 53.4 in September, beating the flash reading of 53.3.

The index stood at 53.6 in March as well - just as the ECB began its bond buying.

"The euro zone manufacturing recovery remains disappointingly insipid," said Chris Williamson, Markit's chief economist.

"With factory production lacking vigor, employment growth sagging to an eight-month low and output prices falling at the fastest rate since February, it's easy to see why the ECB are considering additional stimulus."

The central bank has failed to lift inflation anywhere near its target of just below 2 percent, and official data on Friday showed prices in the bloc were flat last month, heaping more pressure on the bank to act.

It was already almost certain the ECB will ease monetary policy in December, increasing or extending its stimulus

program and further cutting the deposit rate, a Reuters poll of economists taken ahead of the inflation data found.

According to the Markit survey firms cut factory gate prices at the steepest rate in eight months in October. A sub-index measuring output prices fell to 48.6 from 48.7, well below the flash reading of 49.3.

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