According to a study, commercial activity in the Eurozone took an unexpected and unfavorable turn for the worst this month as demand dropped in a widespread slowdown across the area. This leads one to speculate that the union may enter a recession.

HCOB’s flash version of the Eurozone Composite Purchasing Managers’ Index (PMI), which is compiled by S&P Global and is widely regarded as a strong measure of the overall health of the economy, decreased to 46.5 in October from September’s 47.2, marking the index’s lowest reading since November 2020.

Outside of the months affected by the COVID-19 outbreak, it was the lowest value recorded since March 2013. It shocked predictions in a Reuters poll that predicted an increase to 47.4 because it was significantly below the 50 level that separates expansion from contraction.

According to Cyrus de la Rubia, chief economist of Hamburg Commercial Bank, “things are moving from bad to worse” in the eurozone. “The eurozone is moving from bad to worse.” “We wouldn’t be caught off guard to see a mild recession in the eurozone in the second half of this year with two back-to-back quarters of negative growth.”

According to a recent survey by Reuters, the 20-country eurozone would avoid a recession by a razor’s edge; nonetheless, it was anticipated that the economy would have only flatlined in the previous quarter and would continue to do so in the current quarter. In October, companies clearing up their work backlogs created a significant portion of business activity. These companies indicated they do not anticipate a turnaround shortly, and total employment was reduced for the first time since January 2021. The composite employment index went from 50.8 to 49.4, reflecting a decline.

“The employment processes of service providers came to a near stop. “Manufacturing companies are not only continuing to cut staff, but they are ramping up plans to reduce the number of jobs available,” said de la Rubia. The PMI for the region’s leading services industry dropped to 47.8 from 48.7, a low point not seen in 32 months. That was lower than any of the predictions made in the Reuters poll, which had projected that the figure from September would remain unchanged.

Demand for services has decreased again this month at a higher rate than the decline seen in September. The index of newly opened businesses fell to 45.5 from 46.4, reaching a level not seen since the beginning of 2021. The manufacturing PMI dropped to 43.0 from 43.4, marking its 16th month below 50 and reaching its lowest point since May 2020, when the pandemic began solidifying its hold on the planet. Reuters had predicted 43.7 in a survey.

The output index remained unchanged at 43.1 during the measurement. The forward-looking indicators in the poll provided a grim picture, suggesting there will be no reversal shortly. The future output index hit its lowest level of the year with a value of 50.3, reflecting a decline in factory managers’ optimism for the next 12 months. The index had previously been at 51.6.