According to Justin Low, an analyst at financial website Forexlive, the significant decline in business activity in Europe’s key sectors, the largest since May 2020, is not a positive sign for the region. Particularly concerning is the simultaneous sharp decline in both the services and manufacturing sectors.
For the European Central Bank (ECB), the details of the report are even more concerning.
In France, the PMI report indicates a renewed drop in manufacturing prices due to decreases in energy and raw material costs.
However, all of this hasn’t significantly affected the more crucial parts of the economy. Expenditure in the services sector surged in August, suggesting that core price pressures remain relatively high, as these could ultimately be passed on to consumers.
Given the deteriorating economic landscape across the region, coupled with credit tightening and stubborn inflation, guiding market expectations for the September policy decision by the European Central Bank will undoubtedly be a challenging task.
