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== Developments ==
== Developments ==
=== September 2023 ===
==== Manufacturing ====
The eurozone manufacturing economy continued to contract at a sharp rate at the end of the third quarter. Overall, the latest HCOB PMI® data flagged considerable weakness across the sector, with new orders continuing to shrink at a pace that has rarely been surpassed since the survey began in 1997. Although input costs fell sharply yet again, businesses’ efforts to retrench further were evidenced by sustained reductions in employment, purchasing activity and inventories. Subsequently, production cutbacks were extended in September. Meanwhile, there was a considerable softening of business confidence, with growth expectations slumping to a ten-month low. In a bid to boost competitiveness and stimulate demand, eurozone manufacturers decreased their prices charged for a fifth successive month and to one of the greatest extents seen in 14 years<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/a008adc6781e44e48e77db10d6657249</ref>
“The Output PMI was well under 50 for the entire third quarter, so we are feeling pretty certain that the recession in manufacturing continued during this period. We probably won't see things picking up until we ring in the new year, but there are reasons to believe that the bottom of the hard-to-pin-down stocking cycle has been reached. According to the PMI survey, stocks of purchased goods have been diminishing since early this year, but the respective index has been hovering around 45 for the last five months. This marked the bottom during the slowdowns which occurred shortly before COVID-19 hit and 2012, before moving upwards again. Being a bit cautious with this, as we’re still seeing rapidly falling input purchasing, but the stocking cycle could soon recover, ready for a manufacturing bounce-back early next year."
* HCOB Eurozone Manufacturing PMI at 43.4 (Aug: 43.5). 2-month low.
* HCOB Eurozone Manufacturing PMI Output Index at 43.1 (Aug: 43.4). 2-month low.
* Factory job losses intensify amid sinking new orders and deteriorating business confidence
=== August 2023 ===
Output in the eurozone economy declined at the fastest rate in nearly three years in August, latest HCOB PMI® survey data compiled by S&P Global showed. The overall retreat in activity was the fastest since November 2020, and broad-based across the manufacturing and services sectors as the latter contracted for the first time in 2023 so far.  New orders also dropped the most since late-2020, leading to companies completing outstanding work at the fastest rate in over three years. This resulted in one of the softest 12-month outlook in 2023 so far and a near-stalling of jobs growth.<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/382c7872528a4f48bf03911ae648e7f1</ref>
“The eurozone didn't slip into recession in the first part of the year, but the second half will present a greater challenge. For, the once stabilizing services sector turned into a drag for the economy while manufacturing has not bottomed out yet, most probably. The disappointing numbers contributed to a downward revision of our GDP nowcast which stands now at -0.1% for the third quarter. “Input price increases surprisingly picked up putting the perspective of rapidly decreasing inflation into question. The prime suspect is likely the wage hikes, which are not necessarily in sync with the business cycle, given their often longer term nature. “Employers weren't too keen on beefing up their teams. The way things have been going down lately, it's a sign they'll be moving towards job cuts sooner, not later. Still, the decline in unfinished tasks and new orders doesn't seem severe enough at this point to trigger aggressive cuts."
* HCOB Eurozone Composite PMI Output Index at 46.7 (Jul: 48.6). 33-month low.
* Input price inflation accelerates for first time in nearly a year.
* The weakening demand picture was reflected in data on capacity, as the level of outstanding business declined at a faster rate in August. Excluding the pandemic, the drop in backlogs in the latest period was the steepest since the second half of 2012.
* The near-term outlook deteriorated in August as new business fell for the third month running and at the fastest rate since November 2020.
* Exports of both goods and services fell for the eighteenth consecutive month, and at one of the fastest rates on record
[[File:Screenshot 2023-09-05 093030.png|center|thumb|819x819px|<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/382c7872528a4f48bf03911ae648e7f1</ref>]]
==== Manufacturing ====
The eurozone manufacturing sector remained under intense pressure midway through the third quarter, according to the latest HCOB PMI® survey data, as plummeting new orders and rapidly depleting backlogs of work put a considerable squeeze on production lines across the single currency union. Factory employment levels continued to fall, albeit marginally, while purchasing activity was slashed once again as companies maintained their efforts to run down stocks.<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/5631eb23a4fa49a08a7f1dc82004436e</ref>
There was an improvement in optimism during August, despite the rapid and broad deterioration in sector conditions seen on the month. Overall, growth expectations strengthened to a three-month high, but remained well below the long-run average. Country-level data showed that positive sentiment was strongest in Ireland and Italy, followed by Greece, offsetting pessimistic outlooks at firms in Germany, France and Austria.
“These numbers aren't as terrible as they might look at first glance. Obviously, the overall PMI manufacturing index, sitting at 43.5, suggests pretty noticeable weakness in this sector. However, all of the twelve subindices have moved upwards or remained practically unchanged, showing that the downward trend from the past few months is starting to lose steam across the board. Businesses are still holding back from making big staff cuts, even with a substantial drop in output over five months. This does not bode well for productivity or output per head, but provides some stability for the economy as a whole as people do not lose their income. Looking at the PMI price indices, companies were able to keep part of the reductions of input costs for themselves since spring of this year, thereby increasing their profit margins. However, the experience of 2020 and 2021 shows, that on the way up this development tends to reverse and margins suffer. The driver of the downturn has been the destocking cycle. There are tentative signs, however, that this process is nearing its end as companies took their foot off the gas when it came to reducing the stock of purchases in August.
* HCOB Eurozone Manufacturing PMI at 43.5 (Jul: 42.7). 3-month high
* HCOB Eurozone Manufacturing PMI Output Index at 43.4 (Jul: 42.7). 2-month high
* HCOB Eurozone New Orders Index falls to 39.0, prompting firms to continue slashing their charges
==== Services ====
The HCOB Eurozone Services PMI Business Activity Index fell below the no-change mark of 50.0 in August to 47.9, from 50.9 in July and indicating the first decline in activity since December 2022. Moreover, the rate of contraction was the fastest since February 2021.
* The volume of new business fell for the second month running, and at the fastest pace since February 2021. Demand for services has now contracted eight times since the second half of 2022.
* New export business (including intra-eurozone trade in services) fell for the third month running, and at a faster rate. Looking ahead, expectations for business activity remained positive, although the degree of optimism was unmoved from July’s 2023 low.
* With new contracts at service providers drying up in August, the level of incomplete business continued to fall. The rate of contraction was the strongest in two-and-a-half years. This led to greater caution around hiring as employment in the services sector rose at the slowest rate since February 2021
* Input prices at service providers rose at the fastest rate in three months in August, and one that remained above the long-run survey average


=== July 2023 ===
=== July 2023 ===
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* July survey data revealed a renewed reduction in new business intakes at service providers, marking the first contraction in demand for eurozone services since the end of last year. The decline, albeit only modest, was the quickest for eight months. Orders received from export markets also slumped further, July data showed.
* July survey data revealed a renewed reduction in new business intakes at service providers, marking the first contraction in demand for eurozone services since the end of last year. The decline, albeit only modest, was the quickest for eight months. Orders received from export markets also slumped further, July data showed.
* The fall in new business led firms to turn their focus to their backlogs of work. Volumes of outstanding business fell for the first time since January. Employment growth was sustained nevertheless, continuing the current sequence of job creation that began two-and-a-half years ago. That said, the rise in staffing levels was the slowest in five months.
* The fall in new business led firms to turn their focus to their backlogs of work. Volumes of outstanding business fell for the first time since January. Employment growth was sustained nevertheless, continuing the current sequence of job creation that began two-and-a-half years ago. That said, the rise in staffing levels was the slowest in five months.
=== August 2023 ===
Output in the eurozone economy declined at the fastest rate in nearly three years in August, latest HCOB PMI® survey data compiled by S&P Global showed. The overall retreat in activity was the fastest since November 2020, and broad-based across the manufacturing and services sectors as the latter contracted for the first time in 2023 so far.  New orders also dropped the most since late-2020, leading to companies completing outstanding work at the fastest rate in over three years. This resulted in one of the softest 12-month outlook in 2023 so far and a near-stalling of jobs growth.<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/382c7872528a4f48bf03911ae648e7f1</ref>
“The eurozone didn't slip into recession in the first part of the year, but the second half will present a greater challenge. For, the once stabilizing services sector turned into a drag for the economy while manufacturing has not bottomed out yet, most probably. The disappointing numbers contributed to a downward revision of our GDP nowcast which stands now at -0.1% for the third quarter. “Input price increases surprisingly picked up putting the perspective of rapidly decreasing inflation into question. The prime suspect is likely the wage hikes, which are not necessarily in sync with the business cycle, given their often longer term nature. “Employers weren't too keen on beefing up their teams. The way things have been going down lately, it's a sign they'll be moving towards job cuts sooner, not later. Still, the decline in unfinished tasks and new orders doesn't seem severe enough at this point to trigger aggressive cuts."
* HCOB Eurozone Composite PMI Output Index at 46.7 (Jul: 48.6). 33-month low.
* Input price inflation accelerates for first time in nearly a year.
* The weakening demand picture was reflected in data on capacity, as the level of outstanding business declined at a faster rate in August. Excluding the pandemic, the drop in backlogs in the latest period was the steepest since the second half of 2012.
* The near-term outlook deteriorated in August as new business fell for the third month running and at the fastest rate since November 2020.
* Exports of both goods and services fell for the eighteenth consecutive month, and at one of the fastest rates on record
[[File:Screenshot 2023-09-05 093030.png|center|thumb|819x819px|<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/382c7872528a4f48bf03911ae648e7f1</ref>]]
==== Manufacturing ====
The eurozone manufacturing sector remained under intense pressure midway through the third quarter, according to the latest HCOB PMI® survey data, as plummeting new orders and rapidly depleting backlogs of work put a considerable squeeze on production lines across the single currency union. Factory employment levels continued to fall, albeit marginally, while purchasing activity was slashed once again as companies maintained their efforts to run down stocks.<ref>https://www.pmi.spglobal.com/Public/Home/PressRelease/5631eb23a4fa49a08a7f1dc82004436e</ref>
There was an improvement in optimism during August, despite the rapid and broad deterioration in sector conditions seen on the month. Overall, growth expectations strengthened to a three-month high, but remained well below the long-run average. Country-level data showed that positive sentiment was strongest in Ireland and Italy, followed by Greece, offsetting pessimistic outlooks at firms in Germany, France and Austria.
“These numbers aren't as terrible as they might look at first glance. Obviously, the overall PMI manufacturing index, sitting at 43.5, suggests pretty noticeable weakness in this sector. However, all of the twelve subindices have moved upwards or remained practically unchanged, showing that the downward trend from the past few months is starting to lose steam across the board. Businesses are still holding back from making big staff cuts, even with a substantial drop in output over five months. This does not bode well for productivity or output per head, but provides some stability for the economy as a whole as people do not lose their income. Looking at the PMI price indices, companies were able to keep part of the reductions of input costs for themselves since spring of this year, thereby increasing their profit margins. However, the experience of 2020 and 2021 shows, that on the way up this development tends to reverse and margins suffer. The driver of the downturn has been the destocking cycle. There are tentative signs, however, that this process is nearing its end as companies took their foot off the gas when it came to reducing the stock of purchases in August.
* HCOB Eurozone Manufacturing PMI at 43.5 (Jul: 42.7). 3-month high
* HCOB Eurozone Manufacturing PMI Output Index at 43.4 (Jul: 42.7). 2-month high
* HCOB Eurozone New Orders Index falls to 39.0, prompting firms to continue slashing their charges
==== Services ====
The HCOB Eurozone Services PMI Business Activity Index fell below the no-change mark of 50.0 in August to 47.9, from 50.9 in July and indicating the first decline in activity since December 2022. Moreover, the rate of contraction was the fastest since February 2021.
* The volume of new business fell for the second month running, and at the fastest pace since February 2021. Demand for services has now contracted eight times since the second half of 2022.
* New export business (including intra-eurozone trade in services) fell for the third month running, and at a faster rate. Looking ahead, expectations for business activity remained positive, although the degree of optimism was unmoved from July’s 2023 low.
* With new contracts at service providers drying up in August, the level of incomplete business continued to fall. The rate of contraction was the strongest in two-and-a-half years. This led to greater caution around hiring as employment in the services sector rose at the slowest rate since February 2021
* Input prices at service providers rose at the fastest rate in three months in August, and one that remained above the long-run survey average


== References ==
== References ==
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