The euro zone’s business growth slowed further in June, according to a survey. Forward-looking indicators show the region could fall into recession this quarter as the cost of living crisis makes consumers wary.
The S&P Global final composite Purchasing Managers’ Index (PMI) fell to a 16-month low of 52.0 in June from 54.8 in May, just ahead of a preliminary 51.9 estimate.
“The sharp deterioration in the rate of growth of euro zone business activity raises the risk of the region slipping into economic decline in the third quarter,” said Chris Williamson, chief business economist at S&P Global.
“The manufacturing sector is already in decline, for the first time in two years, and the service sector has suffered a marked loss of growth momentum amid the cost of living crisis. Household spending on non-essential goods and services has come under particular pressure due to soaring prices.”
The euro today (July 5) dropped to the lowest in two decades, hitting US$1.0283. This comes as fears of a recession in the euro zone grow as gas prices soar and the conflict in Ukraine shows no signs of ending.
Inflation in the euro zone reached a fresh record high of 8.6 percent in June, ahead of the European Central Bank’s first rate hike in 11 years.
According to preliminary data released last Friday by the European statistics office Eurostat, annual headline inflation for the month of June was at 8.6 percent, up from May’s reading of 8.1 percent, and higher than a prediction of 8.4 percent in a Reuters poll of economists.