Eurozone/PMI: Activity slows, GDP contraction expected in third quarter

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BRUSSELS (Reuters) – The euro zone economy is likely to contract in the current quarter and is unlikely to return to growth anytime soon, despite a slight recovery in activity in September, preliminary results from the monthly survey carried out by S&P Global and HCOB among purchasing managers (PMI).

The composite index, which combines services and manufacturing activity and is considered a reliable barometer of economic health, is at its lowest level in 33 months. It stood at 47.1 in September compared to 46.7 in August and a Reuters consensus of 46.5.

The 50 mark separates expansion and contraction of activity.

“The services PMI figures in the euro zone paint a bleak picture,” said Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank (HCOB), predicting a contraction in euro zone GDP of 0.4% this quarter. .

“The main brake is still linked to the manufacturing sector, where the order situation has further deteriorated,” he explained.

The drop in overall activity in September comes as companies have barely increased their prices. The composite producer price index fell to 52.2, its lowest level since the start of 2021, from 53.3 the previous month.

This drop in prices should, however, be welcomed by the European Central Bank (ECB), which last week raised its main key rate to the record level of 4% in order to curb inflation.

The services PMI index rose from 47.9 to 48.4, but remains for the second consecutive month below the 50 mark. The Reuters consensus forecast 47.7.

The manufacturing PMI, meanwhile, has been below the 50 threshold since mid-2022 and the September figure shows it fell to 43.4 from 43.5 in August and a consensus of 44.0.

(Reporting Jonathan Cable; French version Claude Chendjou, edited by Blandine Hénault)


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