Sep 23, 2022 04:08AM ET
The decline in eurozone business activity deepened in September, falling to its lowest point in 20 months, as pressure on companies from rising inflation intensified.
The composite Purchasing Managers' Index for the euro area, calculated by S&P Global, fell to 48.2, down from 48.9 in August, in line with economists' forecasts. A level below 50 indicates a contraction.
If you take away the numbers recorded during the closing COVID-19, the September PMI slowdown is the sharpest for the currency area since 2013, indicating the strong headwinds facing the euro zone economy.
Activity in the manufacturing and services sectors fell, reaching 19- and 28-month lows, respectively, due to higher prices, especially due to a spike in energy prices related to the recent decline in Russian gas supplies, which forced consumers to cut costs and increase company spending.
Early PMI data points to a 0.1% contraction in the economy in the third quarter.
Employment growth is unchanged after hitting a 17-month low in August, which S&P Global said reflects employers' growing reluctance to hire new workers.
By individual country, Germany, Europe's largest economy, recorded its lowest PMI since May 2020 at 45.9, with the services sector posting its biggest drop in activity in 13 years. However, business activity in manufacturing, a central component of the German economy, also declined, but a reduction in supply chain constraints helped contain the rate of decline.
In France, output rose to 51.2 after nearly stalling in August. Weakness in French factories was offset by accelerating growth in the key services sector.
The EUR/USD traded in the red against the dollar amid PMI data after weakening to a 20-year low earlier Friday, while German 10-year bond yields reached 2% for the first time since 2013.