Economic activity in the euro zone private sector worsened late in the year, raising fears of a recession in the second half of the year.
S&P Global’s preliminary Eurozone HCOB Purchasing Managers Index (PMI) for December, announced on the 15th, fell to 47, disappointing economists who had expected a slight increase. It is far from 50, which marks the boundary between expansion and contraction, and has remained below this level for seven consecutive months. Both manufacturing and service industries fell.
Cyrus Dell’Albia, chief economist at HCOB (Hamburg Commercial Bank), said, “With no clear signs of recovery in the eurozone economy, the latest PMI paints a grim picture. It is extremely likely that the economy will enter a recession starting in the third quarter.”
The PMI also revealed a significant decline in new orders, consistent with other data and indicators suggesting that the euro area economic contraction in July-September was repeated in October-December (fourth quarter). did. However, the European Central Bank (ECB)’s forecast released on the 14th expected a slight improvement in the October-December period.
In line with trends across the eurozone, PMIs for Germany and France, the region’s two largest economies, also worsened.
After the PMI release, German bonds extended their gains and the euro fell. Expectations for the ECB to cut interest rates have strengthened, and the money market is pricing in 155 basis points (bp, 1bp = 0.01%) for next year’s rate cut, widening from around 150bp the previous day.
news-rsf-original-reference paywall">Original title:Euro-Zone Slump Deepens With Recession Odds ‘Notably High’ (1)(excerpt)
2023-12-15 10:55:42
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