Eurozone Economy Edging Toward Recession

By Staff, Agencies

The Eurozone’s economy shrank in the third quarter, with demand falling at the fastest pace in almost three years last month.

HCOB’s final Composite Purchasing Managers’ Index [PMI] for the bloc, a measure reflecting overall economic health, rose slightly to 47.2 in September from August’s 33-month low of 46.7. The figure remained below the 50 level which indicates a contraction.

Output in the Eurozone has been shrinking for four consecutive months, led by a deepening decline in manufacturing. The S&P survey shows that output declined in the services sector as well.

Official data showed that retail sales in the euro area dropped more than expected in August, in a sign of weaker consumer demand amid high inflation. Meanwhile, September’s composite new business index, which monitors overall demand, plunged to the lowest level since November 2020.

“The drop-in retail sales in August and weakness in the final PMIs for September are consistent with our view that the Eurozone economy will fall into recession in the second half of 2023,” Franziska Palmas at Capital Economics said, as quoted by Reuters.

A separate survey reportedly showed that manufacturing activity across the 20-member bloc sharing the euro remained in a broad-based downturn last month amid plummeting demand.

On the positive side, the employment index for services firms was up to 51.5 from 50.4, according to S&P data.