The euro zone economy has just given a first scare to the market, surely foreseeable, although not of the magnitude that it has acquired. This Wednesday the PMI data (purchasing managers index, which is used to measure the growth of the community economy) was released, worse than expected, and which suggests an economic contraction of 0.2% for the third quarter of the year. In fact, in August it stood at 47 points (below 50 indicates contraction), compared to 48.6 in July, which is the worst data since the end of 2020 and which puts two negative GDP readings on the table waiting for what happens in September.
What has especially failed? More or lessthe sector of manufactures It continues to show signs of deterioration. It is not only because of the economic situation in the Eurozone, but also because of the financial difficulties that living in an inflationary world entails for the European Union’s trading partners. The advanced reading of the manufacturing PMI remains negative and closed August at 43.7 points, compared to 42.7 in July. To this has been added the great surprise: the decline of the service sector. The PMI goes into contractive terrain, at 48.3 points from the 50.9 of the previous month, in which it is its worst data in 30 months. This figure is very relevant considering that the European Central Bank (ECB) itself has wanted to highlight in its last two appearances the fact that the service sector continued to be inflationary, due to the increase in consumption and also the wages of its workers in full summer season.
“Unfortunately, the service sector in the euro zone shows signs of a decline, with equally weak results as the manufacturing sector,” says Cyrus de la Rubia, chief economist at Hamburg Commercial Bank in statements collected by Europa Pressfor whom the analysis of the PMI figures leads to the conclusion that “the euro area will contract by 0.2% in the third quarter”.
Max Wienke, eToro’s Germany market analyst, acknowledges that “the situation has gotten much worse as negative sentiment in the manufacturing sector spills over into the service sector” and talks about a “bleak” moment for the Central Bank which “demonstrates how difficult it is to maintain a balance” between monetary policy decisions and the performance of the economy. The president of the regulator, Christine Lagarde, is in the US where the meeting of central bankers in Jackson Hole will take place starting tomorrow. A priori, the ECB has left the door open to the tenth rise in interest rates in September, despite the fact that everything will depend on how a much more costly context in financial terms is permeating the economy, as stressed by the organization in each of their interventions.
The impact on the market has been felt mainly in the field of currencies where the euro continues to lose territory to the US dollar. The European currency has not stopped falling since the last ECB meeting, held on July 27, from 1.11 to 1.08 dollars at the exchange rate. This implies losses of 3%.