Carsten Brzeski, an economist at ING, said: “This is a severe slowdown. We are clearly heading for another weak quarter, with a possible flirtation with recession again.”
Others said rising wages and higher borrowing costs would “take their toll on services firms” after years of record low interest rates.
Chris Hare, an economist at HSBC, said: “The PMIs don’t always deliver a perfect steer on near term growth.
“But if these headwinds do prove to be having a material impact, that raises questions around the scope for a recovery from the eurozone’s mild winter recession in Q2 and beyond.”
S&P Global said the French economy was most at risk of shrinking in the current quarter, even though energy and supply chain worries have eased. Confidence across the bloc also deteriorated, with expectations for the year ahead declining markedly to a seven-month low in June.
Michael Kirker, an economist at Deutsche Bank, said the bloc was likely to stagnate for the foreseeable future.
He said: “There are countervailing forces: falling gas prices will boost purchasing power and lift disposable income.
“However, there are several headwinds, including elevated uncertainty, a drag from US recession, the lag effects of ECB tightening cycle, and a less supportive fiscal stance.
“Until mid-2024, we expect quarterly growth rates of zero or small positives at best. This will leave the economy vulnerable to further contractions or recession.”
