As sustained weakness in manufacturing has spilled over into services, both Germany and France kicked off their third quarter seeing their private-sector economies contracting.

S&P Global’s Flash Purchasing Managers’ Index for Germany fell to the lowest level this year, as its reading for July hit 48.3, falling below the reading of 50 which separates contraction from growth. France performed even worse, reaching a 32 month low of 46.6. Both nations failed to meet the expectations of any economist in Bloomberg surveys.

Germany’s negative reading was driven by manufacturing, which has come in below 0 for over a year, and is now at levels similar to those seen at the beginning of the pandemic in 2020. For a second month services growth also slowed.

Speaking of Germany, Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said, “There is an increased probability that the economy will be in recession in the second half of the year. Over the last few months, we have seen a jaw dropping fall in both new orders and backlogs of work, which are now declining at their fastest rates since the initial Covid wave at the start of 2020. This doesn’t bode well for the rest of the year.”

France also saw both manufacturing and services in contraction again, though of the two, manufacturing was in the worse shape.

Norman Liebke, an economist at Hamburg Commercial Bank said, “The data signal a noticeable cooldown of the economy, showing the sharpest reduction of business activity since November 2020, which preceded a contraction in GDP.”

The PMI readings for the two biggest economies in the Eurozone are seen as a foreboding warning for the region as a whole, which will be releasing its own numbers later Monday, which are also expected to show a contraction in the private sector.

Earlier data showed Australia experiencing a contraction and a stable expansion in Japan, while it is expected that the US and UK will produce numbers demonstrating a solid growth for July.