Eurozone in trouble

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Less and less is being produced in the eurozone.(Bild: AFP/SEBASTIEN BOZON)

According to a business survey, the eurozone economy contracted in September for the first time in seven months. The decline is thus even greater than had been expected in the sector.

The Purchasing Managers' Index fell to 48.9 points from 51.0 points in August, according to the financial services provider S&P Global on Monday. The barometer, in which managers assess business conditions, is an early indicator for the economy that is closely watched on the financial markets. It only signals growth at values above 50.

Economists surveyed by the Reuters news agency had expected a fall to 50.5 points, which would have kept the barometer above the growth threshold.

According to S& P Global, the number one drag on growth was once again industry. Here, the 18th consecutive decline in production was the sharpest since the beginning of the year. The service sector cooled noticeably and reported only a mini increase with the weakest expansion since February. Following the Olympic-induced upturn in August, France again recorded a decline in growth.

Germany the problem child
It was followed by Germany, where economic output in September shrank as much as it last did in February, according to the survey. In the other countries covered by the survey, economic output increased again, albeit at the lowest rate since January.

Germany is currently producing much less than before:

"The eurozone is heading for stagnation," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank - the sponsor of the survey. Gross domestic product (GDP) in the 20 eurozone countries rose by 0.2 percent in the spring, which was not as strong as the 0.3 percent recorded at the beginning of the year. Economists at the European Central Bank recently lowered their outlook for GDP growth in the current year slightly to 0.8%.