Activity in the eurozone’s services sector, including hospitality, retail, and tourism, showed a slight contraction in August.
This was reported by market researcher S&P Global, who had said in a preliminary estimate that there was small growth for the services sector.
The so-called purchasing managers index, which reflects activity, came to 49.8 according to a final figure. A reading of 50 or more indicates growth; below that, shrinkage. In the previous sixteen months, this indicator still showed growth in activity. However, there is also a contraction in activity in the euro area industry.
Based on the figure, S&P Global’s chief economist Chris Williamson said that high inflation and economic uncertainty have caused households and businesses to squeeze their budget increasingly and limit non-essential spending.
For example, travel, recreation, and tourism companies are seeing activities weaken after the growth spurt earlier this year. People also spend less in shops and restaurants due to high inflation.