The latest euro area activity figures are not very encouraging. The HCOB PMI® Flash for the euro area fell to 48.9 points, below the 50 points that mark the boundary between contraction and expansion.
With the industry in agony, the service sector has kept activity afloat in the eurozone for several months. In September, the services index fell sharply to no more than 50.5 points. So that’s a shrinking activity, the lowest in eight months. And it’s not an isolated figure.
2024 can still lead to negative growth
In Germany, the business climate has further deteriorated, with the Ifo index at its lowest since the pandemic. The downward trend is widespread in manufacturing, services, and trade. Orders are low (especially from China), investment is stalled, and consumers are reluctant to spend despite rising wages.
Therefore, the first European economy is experiencing a delicate conjuncture, which suggests an economy in contraction. According to the Ifo, 2024 could still lead to negative growth.
If Germany is not in the eurozone and other countries are doing better at this point, let’s not get under our heads: the economic situation is complex, and without an effective proactive policy, the eurozone will have difficulty getting out of it.
We remain aloof from euro-area equity funds, preferring individual equities.