Euro zone business growth slowed this month as Asian demand weakened, leading to fewer new jobs and forcing factories to reduce output, even though companies raised prices for the first time in over four years, a survey showed on Wednesday.

The slowdown came amid debate on whether the European Central Bank should expand its stimulus programme to have more impact on inflation and growth.

Markit’s Composite Flash Purchasing Managers’ Index , based on surveys of thousands of companies and considered a good guide to growth, came in at 53.9 in September, down from 54.3 last month.

A Reuters poll had predicted a dip to 54.1. The headline index has been above the 50 level that separates growth from contraction since mid-2013. “Exports are under pressure from Asia and that has lowered overall demand. Even in the U.S., there is a fair amount of import substitution,” said Chris Williamson, chief economist at survey compiler Markit.

Fears of China’s economy cooling rapidly, coupled with authorities there devaluing the currency, spooked financial markets last month. Stocks and commodities both fell. Williamson said the PMI pointed to third-quarter euro zone GDP growth of 0.4 per cent, similar to the consensus from a Reuters poll of economists earlier this month.

“This isn’t runaway growth by any means and suggests the ECB is going to be a little disappointed with the results it’s getting from its quantitative easing programme,” Mr Williamson said. The employment sub-index came in at an eight-month low.

There are signs business growth could pick up speed, Mr Williamson added. Backlogs of work rose to the highest since mid-2011. A manufacturing PMI fell to 52.0, matching expectations but down from 52.3, as export orders growth slowed.

The sub-index measuring factory output, which feeds into the composite PMI, fell to a four-month low as a result. The euro zone’s dominant service industry PMI dipped to 54.0 from 54.4 last month.

Economists had predicted 54.2. Service companies were able charge higher prices for the first time in over four years, suggesting disinflationary pressures may be ebbing in the euro zone. That will be welcome news to ECB policymakers struggling to get inflation close to its target of just below 2 percent. It was 0.1 per cent in August.

Reuters