In the Eurozone, the Purchasing Managers Index for October, compiled by S&P Global, has fallen to the lowest level since April of 2013, if you do not consider the artificial suppression of the pandemic lockdowns.

The index dropped to 47.1 in October, down from 48.1 in September, which was lower than analyst expectations. Any reading below 50 is considered representative of an economic contraction. As business activity falters, fears are growing that the entire euro bloc may be heading into a recession.

The biggest declines in the measure were registered in manufacturing, especially in sectors like chemicals and plastics, which are particularly energy intensive. Services output also declined, as the cost of living crisis is forcing consumers to cut back. Inflationary pressures due to rising energy costs which were hitting companies and households also pummeled the demand for goods and services

Chris Williamson, an economist at S&P Global, said, “The Eurozone economy looks set to contract in the fourth quarter given the steepening loss of output and deteriorating demand picture seen in October, adding to speculation that a recession is looking increasingly inevitable.”

S&P Global noted, input buying by manufacturers “fell at one of the steepest rates since the global financial crisis.” While shipping in October improved according to some firms, analysts noted that falling demand left suppliers less busy.

Williamson said, “Price pressures, meanwhile, remain stubbornly elevated, as rising energy and staff costs, and the weakened euro, offset any lowering of commodity prices linked to improving supply conditions.” He added the economic situation was, “getting worse quite rapidly.”

The report suggested that the Euro-bloc’s economy overall will drop by 0.2% in the fourth quarter, however it noted that decline might accelerate. Given the conditions, analysts note that a number of companies have already suspended hiring, or begun to cut staff in preparation for the economic slowdown on the horizon.