LONDON (Reuters) – Economic activity in the euro zone fell back into contraction territory last month, although the slowdown was not as pronounced as initially thought, shows a survey published on Thursday which also reports ‘an attenuation of inflationary pressures.

The final results of the HCOB/S&P Global purchasing managers survey show that the composite indicator fell to 49.6 in September, after 51.0 in August and 48.9 given in the first estimate.

The services PMI index rose from 52.9 in August to 51.4 in September, compared to a flash estimate of 50.5.

The 50 mark separates growth and contraction in activity.

“At first glance, the services sector in the euro zone seems to be holding up quite well. It continues to grow and the slowdown is not yet too pronounced,” notes Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“But if you dig a little deeper and look at each country individually, the picture is not so rosy – with the exception of Spain,” he continues.

Service provider activity in France slowed after the impact of the Olympics, and in Germany and Italy growth almost hit a wall, according to previous data.

However, companies in the currency bloc only marginally increased their prices last month. The composite producer price index fell from 53.0 in August to 51.5 in September, the lowest since the start of 2021.

Eurozone inflation fell to 1.8% in September, below the European Central Bank’s (ECB) target of 2%, supporting the already strong case for further rate cuts directors this month, according to official data released Tuesday.

Demand for services has declined, suggesting there will be no turnaround. The new orders index fell below 50 in September to 49.7, its lowest level in eight months, compared to 51.2 the previous month.

(Written by Jonathan Cable; Claude Chendjou, edited by Blandine Hénault)

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