Eurozone Private Sector Contracts For First Time In 7 Months

(RTTNews) - The euro area private sector shrank for the first time in seven months in September as Germany, France and Italy recorded contractions simultaneously for the first time in 2024 so far, data compiled by S&P Global showed on Thursday.

The final HCOB composite output index fell to 49.6 in September from a three-month high of 51.0 in August. The flash score was 48.9.

The reading was indicative of a marginal decrease in private sector activity. Trends at the sector level worsened as factory output recorded an accelerated decline that was the fastest in the year-to-date, while services growth weakened to a seven-month low.

The final services Purchasing Managers' Index slid less than initially estimated to 51.4 from 52.9 in the prior month. The flash score was 50.5.

The level of new business received by private sector firms decreased at the fastest pace since January. Export sales performances worsened with the biggest fall in new business from non-domestic customers since last December.

There was another monthly fall in volumes of outstanding workloads, extending the current period of backlog depletion to a year-and-a-half. Firms reduced their headcounts with the rate of job shedding the joint-fastest since December 2020. Business confidence continued to weaken, marking a fourth consecutive fall.

There was a marked easing of cost pressures across the currency bloc. Input cost inflation slowed further and output charges grew only moderately.

The big-three economies of the currency bloc, namely Germany, France and Italy registered month-on-month contractions in business activity.

The German private sector output decreased for a third consecutive month and at the fastest pace since February. The HCOB composite output index fell to a seven-month low of 47.5 from 48.4 a month ago. The initial score was 47.2.

At 50.6, the services PMI matched flash estimate and dropped from 51.2.

France suffered a renewed contraction in September, partly reflecting some payback following August's boost from the Paris Olympic Games. The final composite output index fell below the neutral 50.0 threshold to 48.6 from 53.1 in August. The initial score was 47.4.

The services PMI fell less than estimated to 49.6 in September from 55.0 in August. The flash score was 48.3.

Meanwhile, Italy reported its first month of decline in the year-to-date, although the pace of decline was only marginal. The composite output index registered 49.7 compared to 50.8 in August. The services index edged down to 50.5 from 51.4 in the previous month.

Spain's private sector growth accelerated to a four-month high in September with both manufacturing and service sectors recording growth. The composite output index posted 56.3, up from 53.5 in the previous month. Services activity registered its strongest pace of expansion since April 2023. The indicator moved up to 57.0 in September from 54.6 a month ago.