Recession approaches in the Eurozone

The economic contraction in the euro zone accelerated at the start of the fourth quarter…

Photo credit © Barbara Vacher

( — The economic contraction in the euro zone accelerated at the start of the fourth quarter. Indeed, according to the flash estimate of PMI data for October, private sector activity recorded (excluding the months of the pandemic) its sharpest decline in more than ten years. The seasonally adjusted Flash PMI composite HCOB index of overall activity fell from 47.2 in September to 46.5 in October (47.4 consensus), thus signaling a fifth consecutive monthly decline in sector activity private and the strongest contraction since November 2020.

Leaving aside the months of the pandemic, the index also highlights the sharpest decline in economic activity since March 2013. Activity levels fell again across the private sector, with Eurozone manufacturers having in fact reported a seventh consecutive monthly decline in their production in October, while the activity of service providers decreased for a third consecutive month.

In detail, the HCOB Flash PMI index for services activity fell to 47.8 (48.7 in September and 48.6 consensus), the lowest in 32 months, while the Flash PMI index HCOB of the manufacturing industry stood at 43.0 (43.4 in September and 43.7 consensus).

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, comments on the latest survey figures: “the economic situation continued to deteriorate in October in the single currency area, with the manufacturing sector contracting for a sixteenth consecutive month while activity recorded a third consecutive monthly decline in the services sector. The PMI securities indices also fell back again in each of the two sectors and the vast majority of the diffusion indices are moving also on the decline, suggesting a new gloomy quarter in the region. The euro zone therefore risks entering recession in the second half of 2023, after two consecutive quarters of contraction.


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