September 22, 2023 (MLN): Eurozone economic activity shrank further in September but the rate of decline has slowed, a key survey showed on Friday, as APP reported.
Data from the HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global rose to 47.1 in September from 46.7 in August. A figure below 50 indicates contraction.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said he expects the 20-country single currency area to "enter a contraction in the third quarter", shrinking 0.4% from the previous quarter.
The data also showed falling activity in services for a second month.
"The numbers for PMI services in the Eurozone paint a grim picture, but it's not all doom and gloom," he said, pointing to firms hiring "at a somewhat faster pace" in September than in August.
The eurozone economy is struggling since Russia's war on Ukraine began last year, which pushed energy prices to sky-high levels and led to soaring inflation.
Although the economy weathered the storm better than expected and energy costs have since fallen, inflation remains well above the European Central Bank's two-percent target and households are feeling the pinch from higher food and drinks prices.
The eurozone's misery has been worsened by the weak performances of the European Union's biggest economies, France and Germany.
French activity shrank sharply, falling to its lowest level since November 2020, while Germany recorded another contraction in overall activity for the third month.
"In terms of the weakness in the manufacturing sector, France is catching up with Germany," de la Rubia said.
The European Commission earlier this month cut its 2023 and 2024 eurozone economic growth forecasts.
The EU's executive arm said it expected GDP would be 0.8% this year and 1.3% in 2024.
