Fears of a severe recession deepen as European business activity slows on surging energy costs – CNBC

by | Oct 24, 2022 | Business

Business sentiment in the euro area dropped once again ahead of an ECB meeting where President Christine Lagarde is expected to raise rates again.Anna Moneymaker | Getty Images News | Getty ImagesEuropean business activity took another hit in the month of October, reporting the steepest output loss since April 2013 excluding pandemic lockdowns.Firms have been under pressure due to higher inflation, particularly coming from energy costs and wage pressures.The euro zone’s flash composite Purchasing Managers’ Index fell to 47.1 in October, down from 48.1 in September. A reading below 50 represents a contraction in activity.”These numbers post some downside risk to a lot of people’s forecasts, notably the ECB’s,” Chris Williamson, chief business economist at S&P Global Market Intelligence, told CNBC’s “Squawk Box Europe” on Monday.The European Central Bank said in September that the 19-member bloc is set to grow 3.1% this year and 0.9% in 2023. The central bank also forecast inflation at 8.1% this year and at 2.3% in 2024.Manufacturing activity led the losses, but services output also dropped for a third consecutive month.In terms of national breakdown, business activity in Germany came in at 44.1, versus 45.7 in the previous month. Over in France, activity stagnated with a reading at 50 from 51.2 in September.”The situation economically is getting worse quite rapidly,” Williamson said.Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said that the latest data “point to a German recession, as the energy shock is increasingly hitting the real economy.”Loading chart…The euro lost ground against the U.S. dollar and the British pound during morning deals in …

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