Based on the purchasing managers’ index, which predicts economic growth with moderate reliability, the gross domestic product may have contracted by 0.4 percent in the summer.
of the euro area economic growth has slowed down significantly and the risk of a recession is increasing, according to preliminary data on the purchasing managers’ index published on Friday.
In September, the index predicting economic growth with moderate reliability was 47.1 points. When the index is below 50 points, it portends a contraction of the gross domestic product. A reading of more than 50 points, on the other hand, predicts economic growth.
It can be considered positive that the index strengthened from August, when it was 46.7 percent. However, this is a thin consolation when it remained well below 50 points.
The index the productive research company S&P Global estimates that the euro area’s gross domestic product shrank by 0.4 percent in July–August from the previous quarter.
According to the German Commerzbank, the signs of a recession in the euro area are clearer than before based on the purchasing managers’ index. The bank predicts that the euro area will derail into a mild recession during the fall.
In industry, the purchasing managers’ index was 43.4 points.
“The industry in the euro area is already in recession, and there is also a big risk that the entire euro area will sink into recession,” says the chief economist of the financial company Danske Bank Pasi Kuoppamäki.
of the euro area the economy was gloomy in September, especially due to the contraction of the economy in Germany and France. They are the two largest national economies in the euro area.
After the corona virus pandemic, especially the strong demand for services has been a bright spot in the euro area economy. Now the service sector has also started to weaken. In September, the outlook for the service sectors was admittedly not as weak as in August, as the index strengthened to 48.4 points.
“Based on the Purchasing Managers’ Index, it seems that economic growth in the euro area will sort of stop, but according to our understanding, a recession will probably still be avoided,” says the Research Institute Laboren’s Forecasting Manager Ilkka Kiema.
European In its economic forecast published last week, the central bank estimates that the euro area economy will grow by 0.7 percent this year, 1.0 percent next year and 1.5 percent in 2025.
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