LONDON (Reuters) – The slowdown in economic activity in the euro zone accelerated last month as demand in the services sector weakened further, a survey showed on Monday, strengthening the outlook for a recession in the currency bloc.
The economy of the 20 countries sharing the euro contracted by 0.1% in the third quarter, according to official data, while the composite Purchasing Managers’ Index (PMI) for the month of October, in final version, shows a further deterioration at the start of the fourth quarter.
This index, which combines services and manufacturing activity, stood at 46.5 last month, compared to 47.2 in September, its lowest level since November 2020, during which the world was dealing with the COVID-19 pandemic. .
A first estimate gave it at 46.5, while the 50 mark separates expansion and contraction of activity.
The PMI index for the services sector alone stood at 47.8, as expected in the “flash” estimate, after 48.7 the previous month.
“It is possible that the services sector in the eurozone will stumble during this last quarter. Given the sharp drop in new orders, this does not suggest a positive picture for the situation that lies ahead,” said Cyrus of la Rubia, chief economist at Hamburg Commercial Bank.
“Euro zone GDP could well decline in the fourth quarter,” he added, estimating that France was the worst economy in the euro zone, closely followed by Germany and Italy.
The only good news: the composite producer price index fell to 52.0 from 52.2, its lowest level since the start of 2021 when the European Central Bank (ECB) decided last month, for the first time since the start of its current cycle of monetary tightening started in July 2022, to leave its rates unchanged.
(Reporting Jonathan Cable; Claude Chendjou, editing by Kate Entringer)
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