Eurozone business activity has gone into reverse for the first time since February 2021 after companies were hit by falling orders and rising prices, fuelling economists’ expectations of a recession this year.
Fears that the 19-country single currency zone is heading for a sharp downturn were reinforced by S&P Global’s flash eurozone composite purchasing managers’ index for July, which on Friday showed output and new orders both fell for the first time since coronavirus lockdowns in early 2021.
The outlook for the eurozone has worsened in recent weeks after the European Central Bank raised interest rates more than expected on Thursday, while Russia is squeezing natural gas supplies to Europe, Italy is in the grip of a political crisis and record inflation is eroding household spending.