Corporate activity in the eurozone continued to decline last month. This is according to final figures from research firm S&P Global. A recession in Europe also seems imminent.
Some economists even think that part of the eurozone, such as Germany, is already experiencing contraction.
The euro zone’s composite purchasing managers’ index, which measures activity in both manufacturing and services, came in at 48.1. Anything below 50 indicates contraction, and anything above that indicates growth. In August, the economic indicator still stood at 48.9.
In countries such as Germany, Italy and Spain, activity in the service sector declined. In France, there was still growth and even an increase compared to a month earlier. However, companies in the service sector in the eurozone have lost confidence in the economy due to the sharp rise in prices and reduced demand. That confidence fell to its lowest level since May 2020, when the first wave of the corona pandemic was still raging in full force.
Spain also lowered expectations for economic growth for next year on Wednesday on the back of inflation and higher interest rates. The Spanish central bank thinks that the southern European country’s economy is expected to grow by 1.4 percent. In June, the bank still assumed 2.8 percent growth for 2023. Last week, the Spanish government estimated growth for 2023 at 2.1 percent.
Last month, a Reuters poll showed a 60 percent chance of a recession in the eurozone within a year. In another poll, that chance was put at 75 percent for the United Kingdom. In that country, which has a large services sector, activity in that part of the economy declined the most sharply last month since early last year.
