Eurozone business activity fell sharply in October, the biggest drop since 2020
BRUSSELS – As winter approaches, high inflation and growing fears of an energy crisis deepen and accelerate the eurozone’s recession. As per the data, Eurozone business activity fell sharply in October, the largest drop since 2020, according to experts.
The eurozone Purchasing Managers’ Index (PMI) from S&P Global fell to 47.3 in October from 48.1 in September. Worryingly, this is a 23-month low, higher than the expected 47.1. A rate below 50 is considered to indicate danger.
Soaring inflation
Inflation in the 19 countries that use the euro currency was higher than expected last month. It is 10.7%. This is more than five times the European Central Bank’s forecast. The ECB is said to be preparing to raise interest rates again to deal with this. There are concerns that this will put ordinary people with mortgages in more trouble.
The ECB was the one who held back until the end, refusing to raise interest rates in line with the rest of the world. However, after resolving the energy crisis and other issues such as overspending, it was decided to raise interest rates in July to solve the problem. Deposit and refinancing rates are expected to be 2% and 2.50% by the end of the year, respectively. Meanwhile, the US Federal Reserve raised the interest rate by three-quarters of a percentage point on Wednesday. This is the most rapid movement in 40 years.
Germany and France are also having difficulty.
As foreign demand fell, Germany’s industrial sector, Europe’s largest economy, entered a recession. In September, the German industrial sector contracted much more than expected.
France, the eurozone’s second-largest economy, also reported a drop in industrial output in September. According to the PMI, growth in the services sector was slower than expected in October. Spain’s services sector also fell for a second month in a row in October. Inflation continues to rise.
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