The latest data from a purchasing managers’ survey revealed that economic activity unexpectedly contracted at a faster rate in the eurozone during October. Both output and demand saw steep declines, causing concern among economists.
Declining Output and Weak Demand
The HCOB Flash Eurozone Composite Output Index, which measures the combined activity of the manufacturing and services sectors, fell from 47.2 in September to 46.5 in October. This marked the lowest level in nearly three years, indicating a sharper contraction compared to the previous month.
Economists had expected a reading of 47.6, making the actual result more negative than anticipated. Both the services and manufacturing sectors underperformed estimates, with the services sector experiencing an unexpected decline since September.
Furthermore, output experienced its sharpest decline in over a decade, excluding the months affected by the ongoing pandemic. Additionally, falling new orders indicate a worsening demand for both goods and services.
Mixed Results for France and Germany
While France showed some improvement in activity, Germany, on the other hand, experienced a decrease according to separate indices released earlier on Tuesday.
It remains to be seen how long this economic contraction in the eurozone will persist, and what measures may be taken to address the declining output and weakening demand.