Eurozone Slows Down, Composite PMI Falls To 46.7

The eurozone economy is slowing, as confirmed by the S&P Hcob PMI (Business Index of the Standard & Poor’s Hamburg Commercial Bank – ed.) of the eurozone’s total output, which fell to 46.7 in August, while in July it was 48.6. This is the fastest decline in production in the eurozone economy in almost three years.

Hcob PMI is an indicator that expresses economic trends in manufacturing sectors and signals a fall in production for the third month. PMI Hcob for the services sector is also declining and fell below the “no change threshold” of 50, reaching 47.9 compared to 50.9 in July.

“In the first half of the year, the eurozone did not slip into recession, but in the second half of the year there will be more serious problems,” said Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank. “And this is very likely, given that the trend of the tertiary sector, which served as a stabilizer, is beginning to put pressure on the economy, while production has not yet begun to recover. The disappointing numbers have revised downward our real-time GDP forecast, which now stands at -0.1% for the third quarter.”

The worst situation is in the economies of Germany and France, while the recession in Italy and Spain is milder; “Judging by what happened in Germany and France,” concludes de la Rubia, “it looks, however, like Italy and Spain will not be able to avoid a more severe downturn in the tertiary sector.”