The Eurozone economy experienced a significant and accelerating contraction in October, with the purchasing managers’ index (PMI) of business activity dropping to 46.5, down from 47.2 in September, according to a report by S&P Global; this marked the fifth consecutive month with a PMI score below the critical threshold of 50, indicating economic contraction. The report also noted a halt in job creation, ending a 32-month run of employment growth.
The economic decline was broad-based across the Eurozone, with exceptions in Spain, where private sector activity remained flat in October. Germany and France continued to contract sharply, while Italy saw its fastest downturn since the previous year. Ireland registered its first decline in output in 11 months.
The decline in new business was steep since September 2012, marked by the Eurozone’s sovereign debt crisis. Economists have expressed concerns that the Eurozone may face another economic contraction in the fourth quarter of 2023, raising the risk of a recession.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stated, “It looks like the service sector in the Eurozone is stumbling out of the gates for this final quarter.
October marks the third straight month of business activity taking a hit. With new business diving steeply, it is not painting a rosy picture for what is ahead.” The data suggests a darkened economic outlook for the Eurozone as it grapples with various financial challenges.