J.P. Morgan AM: Eurozone business surveys show orders are contracting

J.P. Morgan AM: Eurozone business surveys show orders are contracting

September 12, 2022

Eurozone
Eurozone.jpg

The Composite Purchasing Managers’ Index (PMI) for the eurozone fell to 48.9 in August, hitting an 18-month low. The new orders component of the business survey continued to fall further into contractionary territory, signalling that inflationary pressures and the resultant squeeze on real incomes continue to dampen demand.

Employment meanwhile has continued to rise, with the employment component of the survey still in expansionary territory at 52.5. Importantly, however, the rate of job creation slowed from July to August amid weakened business confidence. With Russia’s announcement that it will cut off Nord Stream gas supplies to Europe indefinitely, and a worsening economic outlook for Europe, employers’ appetite to hire could weaken further in the coming months. As a result, there is a risk that we could see the employment component follow new orders down below 50 into contractionary territory.

12092022 J.P. Morgan AM