Eurozone economic activity showed further signs of weakening in September, with both manufacturing and services struggling. The PMI manufacturing index fell from 45.8 to 44.8, its lowest level in nine months, while the PMI services index fell from 52.9 to 50.5, its lowest in seven months. As a result, the PMI composite index contracted again, and the agriculture index fell from 51.0 to 48.9, its lowest in eight months.
HCOB chief economist Silas de la Rubia expressed growing concern that the eurozone is “heading towards stagnation.” The composite PMI’s fall in September was the biggest drop in 15 months. The weakening momentum is of particular concern as new orders and backlogs are falling rapidly, signaling a possible further economic downturn.
Manufacturing, in particular, has been in a long slump, with the recession now lasting 27 consecutive months. Job cuts in the manufacturing sector are accelerating, with layoffs occurring at their fastest pace since August 2020. Even the services sector, which had been a bright spot for growth, is now showing signs of cooling, with employment growth remaining roughly flat for four consecutive months.
Input and output price inflation has eased, particularly in the services sector, and with the economy continuing to contract, a rate cut in October is “quite likely,” de la Rubia said.
See the full Eurozone PMI report here.
