On Wednesday, Reuters reported that the Eurozone’s economy contracted in the third quarter, as over the last month, demand fell at the fastest rate in nearly three years, according to new data from S&P Global.

Hamburg Commercial Bank’s (HCOB’s) final Composite Purchasing Manager’s Index (PMI) for the Eurozone, a proxy-measure for the bloc’s overall economic health, increased marginally in September to 47.2, rising from August’s 33-month low of 46.7. The figure continued to be well within the range below 50, which indicates contraction.

Eurozone output has shrunk for the last four months, as manufacturing has gradually sunk into a deepening decline. In addition the survey by S&P showed that services output declined as well.

On Wednesday, official data showed retail sales falling more than analysts had anticipated in August, as high inflation contributed to weaker consumer demand. At the same time, the composite new business index for September, which examines overall demand, plummeted to its lowest reading since November of 2020.

Franziska Palmas at Capital Economics said, “The drop in retail sales in August and weakness in the final PMIs for September are consistent with our view that the Eurozone economy will fall into recession in the second half of 2023.”

In another survey, it was revealed that manufacturing activity all across the bloc had continued to endure a broad-based downturn last month, precipitated by declining demand.

One bright note was that the employment index for services companies rose to 51.5, from 50.4, according to S&P’s data.

Cyrus de la Rubia from Hamburg Commercial Bank said, “There is still a frenzy for workers in the services sector. Indeed, Eurozone firms bulked up their teams at a faster pace than in August. That is a head-turner, considering new business is in the doldrums.”