Eurozone composite PMI drops to three-year low in October

The economic downturn in the Eurozone deepened in October, with private sector output declining at its steepest rate in 35 months, according to 'flash' purchasing managers' indices (PMIs) out on Tuesday.

The flash Eurozone composite PMI dropped to 46.5 in October, down from 47.2 in September and surprising economists who had expected a slight tick-up to 47.4.

This was the fifth straight month of falling business activity and the lowest reading since November 2020. However, if pandemic-affected months are excluded, this would have been the steepest rate of decline in over a decade, according to S&P Global.

"New orders also fell at an accelerating rate, pointing to a worsening demand environment for both goods and services. Companies cut employment as a result, representing the first drop in headcounts since the lockdowns of early 2021, and remained focused on cost-cutting inventory management," S&P Global said.

The manufacturing PMI fell to a three-month low of 43, from 43.4 the month before, while the services PMI dropped to a 32-month low of 47.8 from 48.7. Both figures came in below the consensus forecasts.

Meanwhile, the rate of inflation for goods and services moderated slightly in October, falling to its lowest since February 2021. "An ongoing sharp fall in manufacturing selling prices was accompanied by a moderation in service sector selling price inflation," the survey said.