LONDON (Reuters) – The slowdown in economic activity in the euro zone deepened more than expected in August, under pressure from weaker services activity, surveys of purchasing managers show, which suggest that the bloc could enter a recession.
The composite PMI index, which combines services and manufacturing activity, stood at 46.7 for August – a nine-month low – against 48.6 for July, the results of the monthly HCOP survey carried out by S&P Global showed on Tuesday.
A first estimate had given it at 47.0.
“The eurozone did not go into recession in the first half, but the second half will be more difficult,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The disappointing indicators contributed to a downward revision to our GDP forecast, which now stands at -0.1% for the third quarter.”
The services index fell from 50.9 to 47.9, below the ‘flash’ estimate of 48.3, as consumers suffered from rising rates and the high cost of living .
The new orders index, an indicator of demand, continued to contract, dropping from 48.2 to 46.7, a level not seen since the start of 2021.
The survey also shows that companies do not expect an imminent turnaround, with the composite employment index declining from 51.4 to 50.2.
“Employers weren’t very enthusiastic about strengthening their teams. Given the current situation, it is likely that they will move towards layoffs faster than expected,” added Cyrus from the Rubia.
(Jonathan Cable, Corentin Chapron, edited by Blandine Hénault)
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