- Services PMI 51.4 vs 50.5 expected and 52.9 prior.
- Composite PMI 49.6 vs 48.9 expected and 51.0 prior.
Key findings:
- HCOB Eurozone Composite PMI Output Index at 49.6 (Aug: 51.0). 7-month low.
- HCOB Eurozone Services PMI Business Activity Index at 51.4 (Aug: 52.9). 7-month low.
- First month since December 2023 that contraction is seen in all big-three eurozone economies.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“At first glance, the services sector in the eurozone seems to be holding up fairly well. It's still growing, and the slowdown is not too steep just yet. But when you dig a little deeper and look at individual countries, the picture is not as rosy – except for Spain. Here, we are rubbing our eyes in amazement. Service providers there are booming, with the index shooting up to 57 points.
The situation in the other three leading eurozone economies is quite different. In France, service providers' business activity slowed down after the Olympics effect and in Germany and Italy, growth almost hit a wall in September. Even if Spain manages to avoid getting pulled down by the struggles of its neighbours, the eurozone’s services sector as a whole seems to be headed for more sluggish growth. On the ground, most service sector employees have not really felt the pinch yet. In fact, the hiring rate picked up in Spain and France, and even in Italy, jobs growth only dipped slightly.
It is Germany where things look bleakest, with companies there actually cutting staff. This is where the recession in manufacturing is making itself felt, as in this environment the corresponding companies are placing fewer orders with the service sector. The situation in the service sector in the eurozone will continue to deteriorate. This is indicated by the decline in new business.
For the first time since February, it has fallen in the eurozone compared to the previous month. The development in Germany and France is similar. Factoring in the ongoing contraction in industry, the eurozone economy is likely to have grown only at a marginal rate in the third quarter. Our GDP nowcast model, which takes into account the PMI indicators, also points to only minimal growth."
