PMI services below 50 in the Euro zone: risk of recession increasing

The PMI services indices released today all around the Euro zone came in worse than expected in September, signalling that the worsening of the economic outlook may be even stronger than projected. The Euro zone PMI fell from 51.5 to 48.8 - with a downward revision from the flash estimate of 49.1 - the lowest level since August '09. The index set below 50 - anticipating a contraction for the sector - both in Italy and in Germany while remained above 50 in France. The decline of the index below 50 in Germany is a sign that consumer spending may further weaken going forward, dampening the expectations that an improvement of German internal demand may sustain the economic activity and limiting the negative consequences on exports of the peripheral countries crisis. The Euro zone PMI services increased the chances that the Euro zone economy may fall into recession in Q4 '11.