Euro zone September business growth slows more than expected, PMIs show

By Sumanta Dey

(Reuters) - Euro zone business activity weakened last month as new orders came in at a slower pace than first reported and fewer jobs were created, even as services firms raised prices for the first time in four years, surveys showed on Monday.

The data point to modest third-quarter growth and, coming six months after the European Central Bank launched its 60 billion euros a month quantitative easing programme, are likely to disappoint policymakers.

"The final PMI reading came in slightly below the earlier flash estimate but still leaves a signal of the euro zone economy having expanded 0.4 percent in the third quarter," said

Chris Williamson, chief economist at survey compiler Markit.

"However, the failure of the economy to pick up speed over the summer will be a disappointment to the ECB, especially with job creation sliding to an eight-month low."

Markit's final September Composite Purchasing Managers' Index (PMI) came in at a four-month low of 53.6 and weaker than an earlier estimate of 53.9. In August, it was 54.3. The index has been above the 50 mark denoting expansion since July 2013.

The PMI for the dominant service industry dipped as well, settling at 53.7 from August's 54.4 and lower than a flash estimate of 54.0. A similar survey of manufacturing firms

released on Thursday had also fallen, to 52.0 from 52.3.

Cooling new business orders, which came in much weaker than the flash reading, led firms to take on staff at the slowest pace since January.

But in one piece of bright news, the service sector PMI showed firms charged higher prices last month for the first time since August 2011.

Several ECB policymakers, led by President Mario Draghi, have publicly hinted the trillion-euro stimulus programme could be increased or extended if inflation is seen failing to meet the central bank's near 2 percent target.

Those calls grew louder last week after official data showed euro zone inflation slipped below zero again in September.

An earlier composite PMI from Germany, Europe's number one economy, fell to 54.1, weaker than a flash estimate of 54.3 and lower than August's 55.0.

France's composite reading rose to 51.9, a three-month high, and pointed to 0.2 percent growth in the third quarter, according to Markit.

Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.

(Editing by Catherine Evans)