According to a business survey, the Eurozone economy shrank in September for the first time in seven months. The purchasing managers’ index fell to 48.9 points from 51.0 points in August, as financial services provider S&P Global announced on Monday. The barometer, which managers use to assess business conditions, is a leading economic indicator that is closely watched on the financial markets. It only signals growth when the value is above 50.
Economists surveyed by the Reuters news agency had expected a decline to 50.5 points, which would have kept the barometer above the growth threshold.
According to S&P Global, the number one slowing factor was once again industry. The 18th consecutive drop in production was the sharpest since the beginning of the year. The service sector cooled noticeably and reported only a mini-plus with the weakest expansion since February. After the Olympic-related upturn, France recorded a drop in growth again in August. It thus joined Germany, where economic output shrank in September as much as it did in February, according to the survey. In the other countries covered by the survey, economic power grew again, but at the lowest rate since January.
“The eurozone is heading for stagnation,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank – the sponsor of the survey. Gross domestic product (GDP) in the 20 eurozone countries rose by 0.2 percent in the spring, not as much as at the beginning of the year (0.3 percent). Economists at the European Central Bank recently slightly lowered their forecast for gross domestic product growth this year to 0.8 percent.