Brussels: Private-sector activity in the euro area’s two biggest economies has continued to shrink in September with weak demand for goods and services.
While the downturn eased in Germany, it deepened in France, according to business surveys released by S&P Global on Friday. Economists had expected momentum in both countries to remain broadly stable.
The performance of Germany’s services sector was a “pleasant surprise” as it only contracted marginally this month, S&P Global said. Manufacturing, which has been suffering from a slowdown in the global economy and higher interest rates, led the decline in overall activity.
The numbers for the country’s important industrial sector nonetheless indicate that “things aren’t going downhill as fast as before, with the decline in new orders slowing down,” Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said in a statement. “In addition, the reduction in purchasing activity is losing momentum.”
In France, both services and manufacturing worsened, sending private-sector activity down by the most since November 2020. There were widespread reports of weak demand in both sectors, and confidence regarding the next 12 months weakened noticeably, S&P Global said.
“The French economy is steering toward some choppy waters,” said Norman Liebke, an economist at Hamburg Commercial Bank. “We think economic growth will be lower in 2024 than previously expected.”
He added that inflation is still lurking in France, entirely driven by services, with “not much sign of an impact” yet from the government’s decision to impose price caps on certain food products from July.
Flash Purchasing Managers’ Index data for the euro area later on Friday are set to confirm a continued contraction, while earlier numbers from Australia and Japan indicated expansion. A gauge for the UK is expected to show a similar slowdown to last month. US figures are predicted to reveal slight growth.