The eurozone economic system is contracting at its quickest price in three years as a steep decline in manufacturing begins to unfold to companies, a key survey stated Wednesday.
Data from the HCOB Flash Eurozone buying managers’ index (PMI) survey revealed by S&P Global fell to 47 in August from 48.6 in July. A determine under 50 signifies contraction.
The determine is the bottom since November 2020, when the world was thrust into an economically crippling shutdown due to the coronavirus pandemic.
“Considering the PMI figures in our GDP (gross domestic product) nowcast leads us to the conclusion that the eurozone will shrink by 0.2% in the third quarter,” stated Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
The knowledge confirmed the eurozone service sector fell into decline in August, recording the primary contraction in exercise since final December.
The eurozone’s woes have been infected by downturns within the European Union’s largest economies, France and Germany.
“In the manufacturing sector, Germany’s firms are reducing their output at a much faster pace than the French ones. This will only fuel the discussion of Germany being the sick man of Europe,” de la Rubia claimed.
Germany’s “lackluster” economic system will doubtless stagnate once more within the third quarter, the Bundesbank central financial institution stated Monday, because the International Monetary Fund (IMF) predicts it will likely be the one main superior economic system to shrink in 2023.
The dire PMI knowledge comes because the European Central Bank (ECB) will determine subsequent month whether or not to proceed elevating rates of interest within the race to tame red-hot inflation.
De la Rubia stated “the ECB may be more reluctant to pause the hiking cycle in September” after the most recent knowledge.
Eurozone inflation stays excessive at 5.3% in July, effectively above the ECB’s 2% goal, as underlying value strain persists.
“The economy is cooling off significantly, but hawks on the ECB board will be tempted to push for one more hike as wage pressures are translating into elevated inflation pressures for services,” ING senior eurozone economist Bert Colijn stated.
Source: www.dailysabah.com
