The decline in euro zone business activity accelerated faster than initially thought last month as the bloc’s dominant services industry fell into contraction, according to a survey which suggests the bloc could drop into recession.
HCOB’s final Composite Purchasing Managers’ Index (PMI), compiled by S&P Global and seen as a good barometer of overall economic health, dropped to 46.7 in August from July’s 48.6, a low not seen since November 2020.
That was below the 50 mark separating growth from contraction for a third month and shy of a preliminary estimate for 47.0.
“The euro zone didn’t slip into recession in the first part of the year, but the second half will present a greater challenge,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“The disappointing numbers contributed to a downward revision of our GDP ‘nowcast’ which stands now at -0.1% for the third quarter.”
The headline services PMI sank to 47.9 from 50.9, below the flash 48.3 estimate, as indebted consumers feeling the pinch from increased borrowing fees and high living costs reined in spending.