France and Germany are dragging the eurozone towards recession as new data showed business activity in the bloc is at its lowest level in three years.
S&P Global’s PMI slumped to 46.5 in October – well below the 50 mark that separates expansion from contraction and the worst level since November 2020.
Excluding the Covid-hit months, it was the lowest reading since March 2013.
Rising interest rates, a slowdown in global activity and a potential resurgence of the energy crisis due to the conflict in the Middle East are all taking their toll, and analysts warned the eurozone may now slip into recession.
Analysts said there was “much to suggest that a recession in Germany is well underway”, adding that “things are going south” in France’s manufacturing sector with no relief in sight.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “In the eurozone, things are moving from bad to worse.
“We wouldn’t be caught off guard to see a mild recession in the euro zone in the second half of this year with two back to back quarters of negative growth.”
Separate PMI figures for the UK services sector showed a fall to 49.2in October – the lowest reading since January and the third consecutive month of contraction.
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