“The recession in the euro zone economy deepened in September, and business activity contracted for the third month in a row,” noted S&P Global analysts, who compiled the euro zone Purchasing Managers’ Index (PMI).
“Although small, the decline has accelerated to a pace that is the fastest since 2013 outside of the pandemic,” the researchers added.
The index fell from a fixed indicator of 48.9 points in August to 48.2 points in September.
A reading below 50 points indicates an economic recession.
“A eurozone recession is on the cards as companies report worsening business conditions and increasing price pressures from soaring energy costs,” said Chris Williamson, chief business economist at S&P Global.
“Germany is facing the most difficult conditions, with the economy deteriorating at a rate not seen since the global financial crisis, excluding the pandemic,” the analyst noted.
Rapidly rising energy prices and a sharp increase in the cost of living are reducing demand and limiting production.
Annual inflation in the euro area rose to 9.1 percent in August. – at an all-time high, and analysts predict that inflation could reach double digits by the end of the year.
The European Central Bank (ECB) raised interest rates by as much as 75 basis points this month, pledging to do everything it can to curb rising consumer prices.
According to Mr. Williamson, the data show that the euro zone will shrink by 0.1 percent in the third quarter of 2022, and even more in the fourth quarter.
“As a result, the challenge for monetary policymakers to tame inflation and avoid a painful economic downturn is becoming increasingly difficult,” the analyst added.