Waitresses attend to customers at the terrace of a bar in Ronda, southern Spain, July 27, 2023. REUTERS/Jon Nazca
In the month of August, the decline in business activity in the euro zone accelerated at a faster pace than initially estimated. The bloc’s dominant services industry fell into contraction, implying that the euro zone could potentially enter into a recession. According to the final Composite Purchasing Managers’ Index (PMI) by HCOB, compiled by S&P Global, the index dropped to 46.7 in August from July’s 48.6, hitting its lowest level since November 2020. This reading was below the 50 mark, which separates growth from contraction, for the third consecutive month and fell short of the preliminary estimate of 47.
Cyrus de la Rubia, the chief economist at Hamburg Commercial Bank, stated that while the euro zone did not slip into a recession in the first part of the year, the second half would present a greater challenge. The disappointing numbers contributed to a downward revision of the GDP forecast for the third quarter, which now stands at -0.1 percent. The services PMI also saw a decline, dropping to 47.9 from 50.9, below the flash estimate of 48.3. This decline can be attributed to indebted consumers reducing their spending due to increased borrowing fees and high living costs. Additionally, the new business index, which indicates demand, dropped to 46.7 from 48.2, reaching its lowest level since early 2021.
However, there was some relief in the manufacturing sector as the downturn eased last month. This suggests that the worst may be over for the bloc’s beleaguered factories. Another survey showed that firms were not expecting an immediate turnaround, as they barely increased their headcount last month. The composite employment index dropped to 50.2 from 51.4. De la Rubia added that this indicates employers’ reluctance to hire and suggests that they may move towards job cuts in the near future.
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
