Purchasing Managers Index Euro zone manufacturing (PMI) fell 1.1 points in the preliminary reading for September, standing at 48.5 compared to 49.6 in August. The figure disappoints market expectations, which had expected a slightly lower drop to 48.7. This is the eighth consecutive month of falls for the indicator and the third in contraction territory. It is also the lowest reading seen in 27 months, since June 2020.
The Services PMI has fallen nine tenths, falling from 49.8 to 48.9its lowest level in 19 months, since February 2021. The figure has worsened the estimates of experts, who expected it to be at 49. This is the second consecutive month of contraction for the indicator.
Chris Williamsonchief economist at S&P Global Market Intelligence, commented on the preliminary PMI data: “A recession looms in the eurozoneas companies report worsening business conditions and intensifying price pressures due to rising energy costs.”
“Early PMI readings indicate an economic contraction of 0.1% in the third quarter, and the pace of decline has accelerated in the three months to September, indicating the worst economic performance since 2013, excluding months of pandemic lockdown. Williamson added.
EUR/USD reaction
EUR/USD has tumbled after the German data release, falling nearly 45 pips and breaking the 0.9800 area to make new 20-year lows at 0.9767. At time of writing, the pair is trading above 0.9775, shedding 0.56% on the day.
Source: Fx Street
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