A café in Paris. France - the euro zone's second biggest - returned to contraction following August's Olympics boost. Photograph: Emmanuel DunandEuro 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.
Overall demand fell at the fastest rate in eight months. The new business index plunged to 47.2 from 49.1. “The one positive development is that price pressures are easing. This will be reassuring for the ECB and perhaps raises the chance that policymakers will cut the deposit rate again in October,” said Andrew Kenningham at Capital Economics.
Central banks around the world are easing monetary policy. China’s central bank supplied cash to its banking system for the first time in months on Monday while the US Federal Reserve kicked off an anticipated series of rate cuts last week with a larger-than-usual 50 basis point reduction.