A measure of the eurozone economy in August fell to an 18-month low as consumers feel the pinch from inflation, even if the same data shows price pressures at businesses may have peaked.
The flash reading of the S&P Global eurozone purchase managers composite index fell to 49.2 from 49.9 in July. Any reading below 50 indicates deteriorating conditions. The flash reading is based on 85% to 90% of the total responses each month and usually tracks closely with the final result.
The flash manufacturing index fell slightly, to a 26-month low of 49.7 from 49.8, while the services PMI weakened to 50.2 from 51.2.
According to S&P Global, the decline in business activity was centered in Germany, which posted the sharpest decline in output since June 2020. Outside of Germany and to a lesser extent France, output did increase, but marginally.
“Cost of living pressures mean that the recovery in the service sector following the lifting of pandemic restrictions has ebbed away, while manufacturing remained mired in contraction in August, seeing another record accumulation of stocks of finished goods as firms were unable to shift products in a falling demand environment. This glut of inventories suggests little prospect of an improvement in manufacturing production any time soon,” said Andrew Harker, economics director at S&P Global Market Intelligence.