“Eurozone Bracing for Impending Recession”, Reveals Recent Study
Dublin: The Eurozone finds itself facing the looming spectre of a potential recession yet again. In October, business activities in the Eurozone experienced a disheartening decline, resulting in negative growth. This alarming trend has European nations closely monitoring the situation with growing apprehension.
The flash Purchasing Managers’ Index (PMI) for the Eurozone dropped to 46.5 in October, a notable dip from 47.2 in September, marking the swiftest decline seen in three years. Multiple financial hubs have issued warnings that the situation in the Eurozone is deteriorating.
Service sector activity decreased by nearly one point in September, plummeting to a 32-month low of 47.8 as the boost from summer holidays waned. Concurrently, manufacturing activity remained stagnant at a low point of 43.1.
This stark decline in the comprehensive PMI surveys is the most severe since the onset of the pandemic. Excluding the pandemic years, this is the most substantial decline witnessed in over a decade, as reported by S&P.
Economists are now cautioning that the risk of a ‘technical’ recession, characterised by two consecutive quarters of negative growth, is on the rise. The PMI data reveals a concerning drop in new orders, attributed to reduced demand for both goods and services, prompting companies to initiate job cuts—a development not seen since the lockdowns of 2021.
The European Central Bank (ECB) is scheduled to convene on Thursday for its first rate-setting meeting following suggestions of a potential halt to rate hikes in September. ECB President Christine Lagarde has overseen ten rate increases since the summer of 2022. Member states across the EU are anxiously awaiting the ECB’s next steps as they grapple with record-high interest rates.
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