Eurozone business activity picks up further in Sept

Private sector business activity in the 16-nation eurozone picked up further in September as the services sector returned to positive territory, a closely-watched survey showed on Wednesday.

But analysts warned that an acceleration in unemployment would tighten the brakes on already "waning" momentum, with consumer spending likely to be held back in the run-up to the crucial Christmas retail period.

Overall economic activity improved after emerging from negative territory in August but manufacturing business slowed, according to the survey of some 14,000 companies, designed to provide a snapshot of the economy's health.

The flash estimate purchasing managers' index (PMI) for the 16 countries using the single currency, compiled by data and research group Markit, rose to 50.8 points from 50.4 in August.

The services index, based on around 85 percent of survey replies, rose from 49.9 points to 50.6, topping the emblematic 50-point boom-or-bust line to indicate a return to growth in this segment for the first time in 16 months.

Chris Williamson, chief economist at Markit, said the results "round off the strongest quarter since the second quarter of last year, suggesting that the eurozone economy stabilised in the third quarter.

"Robust manufacturing inventory ratios and service sector confidence suggest we could see an even better performance in the fourth quarter.

"However, the momentum of the rebound is showing some signs of waning, with an increase in the rate of job losses in September particularly disappointing and suggesting only modest growth lies ahead."

Having slowed over the previous four months, the rate of job losses increased in September -- a 15th straight month of rising unemployment -- with input costs and selling prices falling only slightly slower than before.

IHS Global Insight chief economist Howard Archer warned that "activity is still hardly racing ahead and serious obstacles remain to sustainable healthy eurozone growth."

Echoing Archer's view that the European Central Bank is unlikely to alter its monetary stance, Clemente De Lucia of BNP Parbias stressed that the indices "are still extremely low by historical standards.

"The recovery in the manufacturing sector might fade next year, once the effects of budgetary stimula are not felt any more and the technical rebound following the end of the de-stocking cycle runs out of steam," De Lucia said.

In other data for the eurozone released Wednesday, the European Union's Eurostat agency said new industrial orders in July rose by 2.6 percent, a slowing after June's gain of 4.0 percent.