Private sector demand slides across Eurozone
By Abigail Townsend
Date: Wednesday 04 Oct 2023
(Sharecast News) - The Eurozone economy continued to falter last month, data showed on Wednesday, as demand for goods and services fell sharply.
The final HCOB composite PMI output index was 47.2 in September. That was an improvement on August's 46.7, a 33-month low, but it remains below neutral 50 mark for the fourth consecutive month.
A reading above the 50 indicates growth, while one below it suggests contraction.
The composite index is a weighted average of the HCOB manufacturing PMI output index and the services index.
HCOB noted that while the manufacturing sector's malaise had been a "prominent" feature of the PMI surveys for over a year now, September's data showed growing weakness in the services economy as well. The HCOB Eurozone services PMI business activity index was 48.7, an improvement on August's 47.9 but still in contraction.
Output volumes in both sectors were constrained by deteriorating demand conditions, with new orders falling at the fastest pace since November 2020.
Confidence about the coming year also faded, and growth expectations fell to their weakest point for 10 months.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "Given the PMI for services perked up in September, you may be tempted to spot a few green shoots. Not so fast. For starters, the index is still in contradictory territory. Even glancing at Germany and Spain, where the index moved above 50, this happened only marginally, indicating more of a standstill.
"Then you have the second largest economy of the Eurozone, France, where business activity is...nosediving, signalling a deeper economic downturn."
Spain's composite PMI output index in September was 50.1, Germany's 46.4 and France's 44.1, a 34-month low.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Demand for both goods and services is falling, though it is sinking faster for goods.
"The plunge in new orders, the most since November 2020, explains why hiring intentions have all but disappeared in recent years. It also explain why firms' outlook for the year-ahead has continued to worsen."
Rory Fennessy, economist at Oxford Economics, said: "The Eurozone economy likely slipped into contraction in third quarter, although the divergent performance across countries and volatilities in Irish GDP data makes this harder to assure with certainty.
"But regardless of if GDP ends up stagnant or contracting slightly in the third quarter, the bigger picture of a deteriorating outlook, with headwinds on several fronts, remains unchanged."
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