Eurozone economy falters as services growth softens
By Abigail Townsend
Date: Thursday 03 Oct 2024
(Sharecast News) - The eurozone economy faltered in September, a closely-watched survey showed on Thursday, weighed down by slowing growth in the bloc's dominant services sector.
The latest seasonally-adjusted HCOB eurozone composite PMI output index was 49.6, down on August's 51.0 and the first time it has fallen into contraction since February. It was, however, above the flash estimate of 48.9.
A reading above the neutral 50.0 mark indicates growth, while one below it suggests contraction.
The output index is a weighted average of the manufacturing PMI output index and the services PMI business activity index.
The services index fell to 51.4, a seven-month low, from 52.9 a month earlier, while the manufacturing PMI - which was released earlier in the week - eased 0.8 points to 45.0.
Germany, France and Italy also all showed contractions for the first time since December 2023.
Germany's composite PMI output index came in at 47.5 and Italy's at 49.7, while France - which had seen strong growth in the services sector in August due to the Olympics - slid to 48.6. In stark contrast, Spain's PMI hit a four-month high of 56.3.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "At first glance, the services sector appears to be holding up fairly well.
"But when you dig a little deeper and look at individual countries, the picture is not as rosy, except for Spain.
"The situation in the service sector in the Eurozone will continue to deteriorate. This is indicated by the decline in new business. Factoring in the ongoing contraction in industry, the Eurozone economy is likely to have grown only at a marginal rate in the quarter.
"Our GDP nowcast model points to only minimal growth."
Leo Barincou, senior economist at Oxford Economics, said: "With the exception of Spain, September's PMIs add to a string of weak survey data in recent months, all pointing to a faltering recovery in the Eurozone and posing a downside risk to our forecast of modest growth in the second half of the year.
"We now believe that these repeated signals of economic weakness, along with a drop in September's inflation, should help tilt the balance in favour of a rate cut at the European Central Bank's next meeting in October."
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