Business Private activity in the eurozone contracts in August for the second consecutive...

Private activity in the eurozone contracts in August for the second consecutive month, according to the PMI index

File – A worker cleans his establishment, on December 30, 2021, in Santander, Cantabria, (Spain). The Superior Court of Justice of Cantabria has dismissed the appeal of the region’s hoteliers against the last Covid traffic light and has ra – Juan Manuel Serrano Arce – Europa Press – Archive

The activity of companies in the euro zone as a whole during the month of August registered a contraction for the second consecutive month, as reflected in the purchasing managers’ index (PMI, for its acronym in English), prepared by S&P Global, which in the eighth month of the year it stood at 48.9 points, from 49.9 in July.

“A second month of deteriorating business conditions in the euro zone raises the possibility that GDP will contract in the third quarter. In August, total activity fell at a rapid pace, with companies and households reducing their spending in amid the recent rise in inflation and growing uncertainty about the economic outlook,” said Chris Williamson, chief economist at S&P Global Market Intelligence.

The firm has indicated that the weak activity reflected the fall in demand, and in turn, new orders also decreased at a faster pace.

“The drop in activity was largely due to worsening demand, as strong inflationary pressures and subsequent cost-of-living concerns caused customers to postpone their purchasing decisions,” the report said.

By country, Germany recorded its worst level in the last 27 months, standing at 46.9 points, while France reached its worst figure for 17 months (50.4 points). Italy’s index was 49.6 integers, the best data in two months, while Spain’s reached its lowest since February, with 50.5 points.

“Looking ahead, an increased pace of lost new orders in August suggests the slowdown in overall activity could accelerate in September, with companies already cutting their hiring due to lower-than-expected sales, rising costs and concern about future growth prospects,” added Williamson.

Source: Europa Press

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