By Xavier Fontdegloria
Growth in the eurozone services sector slowed in October as the rebound from the summer reopening waned and renewed public health concerns weighed on demand, according to data from a purchasing managers survey.
The final reading for the eurozone's services PMI in October was 54.6, data from IHS Markit showed Thursday. The reading is below the 56.4 registered in September and marginally lower than the 54.7 preliminary estimate. A reading above 50 indicates an expansion of activity, while below this threshold signals a contraction.
The eurozone's composite output index, which gauges activity in both the manufacturing and services sectors, fell to 54.2 in October from 56.2 in September, its lowest reading for six months.
The service sector continued to be the primary driver of economic growth at the start of the fourth quarter, despite the expansion weakening, the data showed. Supply bottlenecks constrained production at manufacturers.
"Despite the slowdown, the rate of expansion remains consistent with quarterly gross domestic product growth of 0.5%, but there's a worrying lack of clarity on the direction of travel in coming months," Chris Williamson, chief business economist at IHS Markit, said.
Supply-side constraints fuelled strong inflationary pressures, with both input costs and output prices rising at record rates, IHS Markit said.
"With supply shortages getting worse rather than better in October, manufacturing growth is likely to remain subdued for some time to come," Mr. Williamson said. That leaves the eurozone's economy reliant on the service sector, and there are already signs that rising virus cases are dampening services activity in many countries like Germany, he said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
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