Eurozone PMI Services was finalized at 51.4 in September, down from August’s 52.9. PMI Composite fell to 49.6 from 51.0, both hitting 7-month lows. This marks the first month since December 2023 that all of the big-three Eurozone economies showed signs of contraction.
Spain led with a Composite PMI of 56.3, a 4-month high. However, Italy recorded a 9-month low at 49.7, France fell to 48.6, a 6-month low, and Germany’s Composite PMI dropped to 47.5, a 7-month low.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, pointed out that service sector growth has slowed across the Eurozone, especially in Germany, Italy, and France, where activity “almost hit a wall”.
He added that the decline in new business is a worrying sign, indicating that the service sector will “continue to deteriorate,” dragging overall economic growth. With the industry also in contraction, Q3 growth in the Eurozone is expected to be minimal.
On the positive side, service sector operating costs saw their slowest rise since early 2021, and inflation in selling prices is easing. This economic softness strengthens the case for ECB to cut interest rates in October, a possibility ECB President Christine Lagarde has recently hinted at.
