Business activity in the Eurozone fell further in the last month. This is according to figures from research firm S&P Global. With this, it seems that recession is knocking on the doors of Europe. Some economists believe that part of the eurozone, such as Germany, is already suffering from deflation.
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The Eurozone Composite PMI, which measures activity in both manufacturing and services, came in at 48.1. That’s less than 50, which is the deflation limit. In August, the economic index was still at 48.9.
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Services dry
In countries such as Germany, Italy and Spain, activity in the service sector has declined. In France, there was still growth, and even an increase compared to the previous month. Companies in the Eurozone service sector have lost confidence in the economy due to the strong increase in prices and reduced demand. That confidence fell to its lowest level since May 2020, when the coronavirus pandemic was still in effect.
A Reuters poll last month showed there was a 60 per cent chance of a recession in the eurozone within a year. For the UK, that chance was estimated at 75 per cent in another survey. In that country, which has a large service sector, activity in that part of the economy has fallen sharply last month since early last year.
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