By Jonathan Cable

LONDON (Reuters) -Euro zone enterprise exercise stalled once more this month, remaining in contractionary territory as demand from each house and overseas fell regardless of companies barely rising their costs, a survey confirmed on Thursday.

HCOB’s preliminary composite euro zone Buying Managers’ Index, compiled by S&P World, nudged up to 49.7 in October from September’s 49.6 however remained beneath the 50 mark separating development from contraction for a second straight month.

A Reuters ballot predicted a much bigger raise to 49.8.

“The survey is in line with a weak economic environment with slowing inflation thanks to softening demand,” mentioned Bert Colijn at ING.

“The PMI was slightly up thanks to an easing contraction in manufacturing, hardly something to cheer about since the manufacturing sector has been in contraction since late 2022.”

Even the extra resilient companies sector was experiencing a weakening of latest orders, he famous.

The composite new enterprise index barely elevated from September’s eight-month low of 47.7, coming in at 47.8. The brand new export enterprise studying – which incorporates commerce amongst euro zone members – was additionally sub-50.

Enterprise exercise in Germany, Europe’s largest economic system, shrank in October however much less steeply than in September, in response to its PMI.

In France, the foreign money union’s second largest economic system, the dominant companies sector contracted at its sharpest price in seven months, dragged down by sluggish new orders.

The PMI for Britain, outdoors the European Union, confirmed companies reported their slowest development in 11 months whereas hiring shrank for the primary time this 12 months as uncertainty forward of the Labour authorities’s first funds dampened confidence.

ECB RATE CUTS EYED

Thursday’s PMI surveys had been the primary main snapshot of financial exercise because the European Central Financial institution minimize rates of interest final week for the third time this 12 months.

The central financial institution has recognised the deteriorating financial outlook and a few policymakers have spoken concerning the danger of undershooting the two% inflation goal – a outstanding change in tone after a two-year marketing campaign to rein in costs.

“We believe that today’s print strengthens the case for the ECB to continue with rate cuts at the December meeting,” mentioned Paolo Grignani at Oxford Economics. “At the moment the magnitude of the cut remains uncertain, as it is still early in the quarter and there is a significant amount of data to be released.”

Markets have totally priced in one other quarter-point price minimize in December, according to a Reuters ballot of economists.

Euro zone authorities bond yields had edged decrease forward of the numbers and held down as buyers acquired affirmation of the area’s sluggish development.

Progress within the bloc’s dominant companies business slipped once more and its PMI dipped to 51.2 from 51.4, confounding expectations within the Reuters ballot for a rise to 51.5.

That was regardless of companies solely marginally rising their fees. The companies output costs index was simply above September’s 41-month low at 52.6.

A greater than two 12 months decline in manufacturing exercise within the bloc continued though wasn’t as deep as in September. The manufacturing unit PMI rose to 45.9 from 45.0, exceeding ballot expectations for a extra modest rise to 45.3.

An index measuring output bounced to 45.5 from 44.9.

Nevertheless, optimism concerning the 12 months forward waned. The long run output index dropped to a 12-month low of 52.3 from 53.6