The Purchasing Managers’ Index (PMI) in the private sector of the Eurozone fell by 1.9 points in August compared to July, to 46.7 points, the lowest level since November 2020, as determined by Hamburg Commercial Bank (HCOB), which compiles reports for S&P Global, lowering its initial estimate. Values below 50 points indicate a decline in activity.
Excluding the pandemic period, the decline was the strongest since March 2013 and the debt crisis, HCOB emphasizes.
– The Eurozone did not slip into recession in the first half of the year, but the second half will be a greater challenge – said chief economist of the German bank Cyrus de la Rubia, adding that due to ‘disappointing’ figures, they now expect a decline in activity in the third quarter of 0.1 percent.
The burden on activities in August was the decline in the services sector as indebted citizens reduced consumption under the pressure of higher borrowing and living costs.
In such conditions, demand for services recorded the largest decline since the beginning of 2021. When industrial goods are added, the decline was the largest since the end of 2020, forcing companies to revert to old orders and nearly halt hiring.
– Employers were not overly interested in strengthening teams. Considering the deterioration of the situation recently, this is a sign that they will likely soon begin to cut jobs – said de la Rubia.
Also concerning is the accelerated growth of input prices on a monthly basis, the first time in almost a year, HCOB notes. Companies have therefore slightly raised average selling prices, they add.
In the group of leading economies, there was a sharp decline in activity in the German and French services sectors. In Italy and Spain, it was relatively mild, HCOB notes.
