Euro zone business activity contracted sharply and unexpectedly this month as the bloc’s dominant services industry flatlined while a downturn in manufacturing accelerated, a survey showed on Monday.
HCOB’s preliminary composite euro zone Purchasing Managers’ Index , compiled by S&P Global, sank to 48.9 this month from August’s 51.0, below the 50 mark that separates growth from contraction for the first time since February.“As the Olympic flame was extinguished, so was euro zone optimism. The August uptick in the PMI was met by a sharp decline in September. This further fuels growth concerns in the bloc as inflation worries fade,” said Bert Colijn, an economist at ING.
“A technical recession seems to be baked in,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, forecasting Germany’s economy would shrink by 0.2 per cent this quarter. On Sept. 12 the ECB cut interest rates again and signalled a “declining path” for borrowing costs in the months ahead as inflation slows and economic growth in the euro zone falters.