The euro area private sector business activity contracted at the sharpest pace since January 2021 as output in both manufacturing and services sectors declined at faster rates amid high inflation, rising economic uncertainty and weakening demand, final survey results from S&P Global showed on Wednesday.
The final composite output index fell to a 20-month low of 48.1 in September from 48.9 in the previous month. The index has remained below the crucial 50.0 mark for the third straight month and was also below the flash 48.2.
The services Purchasing Managers’ Index came in at 48.8 in September versus 49.8 a month ago and the flash reading of 48.9.
The survey showed that overall intakes of new business dropped for a third straight month and the pace of fall marked the strongest since November 2020. Employment growth continued to ease in September, reflecting a lack of incoming new work.
Further, cost pressures intensified primarily reflecting sharply rising energy costs and higher wages. Business confidence slumped to its lowest level since the first COVID-19 wave in 2020.
Among big-four economies, France was the only nation to report an improvement in activity levels, but that was weak overall and significantly softer than those seen earlier in 2022.
The composite PMI came in at 51.2, in line with estimate, versus 50.4 in August. The services PMI advanced to 52.9 from 51.2, but slightly below the preliminary score of 53.0.
Elsewhere, economic trends worsened in September. Spain recorded its first decrease in business activity since January with the index easing to 48.4 from 50.5 in the prior month. The services PMI dropped more-than-expected to 48.5 from 50.6. The reading was seen at 49.8.
In Germany, private sector output levels fell at a rate which, excluding pandemic-hit months, was the sharpest since the global financial crisis in 2008-09. The final composite output index slid to 45.7 from 46.9 in August. The flash score was 45.9.
At 45.0, the services PMI dropped from 47.7 in August. The reading was also below the flash score of 45.4.
At the same time, the downturn in Italy accelerated. The composite output index fell to 47.6 in September from 49.6 a month ago. The reading signaled the sharpest fall in the current three-month sequence of contraction. The services PMI posted 48.8 versus 50.5 in August.
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