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Markit Purchasing Managers Index disappoints

The Markit Purchasing Managers Index (PMI) has today disappointed investors with a suggestion that growth in the euro zone has fallen from 1% in the second quarter of 2010 to just 0.6% in the third quarter. The PMI index itself fell from 55.9 in August to 53.6 in September which was well below the 55.5 expected by analysts.

Any figure above 50 indicates that the economy is growing and any figure below 50 indicates that the economy is shrinking. Even though technically it looks as though the euro zone economy is still growing the reduction in the rate of growth is a concern. This is the lowest reading of the PMI since February 2010 and does not bode well for the immediate future. No doubt the ECB will be taking a very close interest in the PMI which has often given a very good indication of underlying economic strength.

The survey itself is compiled using answers from around 2000 businesses in the euro zone ranging from banks to restaurants and everything else in between. Slowly but surely it seems that worry is creeping into the business arena and indeed consumers are now more concerned about their short-term job prospects than in the recent past. These are very tricky times for the euro zone and the rest of the world.

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