European composite of manufacturing and services showed a contraction for the ninth consecutive month in October, suggesting the economy will continue deterioration with the beginning of the fourth quarter.
Data released today showed that the final PMI composite recorded a contraction of 45.7 from 46.1 in September, where 45.4 from 46.1 in September, while services widened contraction to 46.0 from a prior of 46.1.
The euro area dropped 0.2% in the second quarter and may continue in negative growth in the last two quarters of the current year as the debt crisis continues to weigh on growth prospects.
The ECB revised down its growth forecasts for the euro area in Sep. to have a real GDP growth in a range between -0.6% and -0.2% this year and between -0.4% and 1.4% for 2013.
In Germany, manufacturing showed a widening contraction to 46.0 from 47.4 and services reported a contraction of 48.4 from 49.7 recorded in September.
The French figures showed a contraction of 43.7 from 42.7 in September, while services recorded a contraction of 44.6 from 45.0.
Still, companies are lowering their output and lying off employees to cut expenses on the back of the deepening debt crisis which forced euro area governments to adopt sharp austerity measures to trim their huge budget deficits.
Euro area skyrocketed to 11.6% in September, the highest since compiling data for the first time in 1995, while Augusts reading was revised up to 11.5% from 11.4%.
On the other hand, still there are worries from the debt crisis amid the hesitation of the Spanish government to formally request a bailout and concerns from Greece as Greeks are preparing for a 48-hour strike on Tuesday to protest the new austerity which is set to be approved by Parliament tomorrow to guarantee the disbursement of the next installment worth more than 31 billion euros needed massively to avoid bankruptcy.
The ECB left interest rate at its record low of 0.75% last month after it announced its new Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area to help in tacking the lingering euro area debt crisis in September, where eyes will focus on this weeks interest rate decision by the ECB which will be followed by a press conference delivered by ECB president Mario Draghi.
Meanwhile, the euro is trading lower against the dollar for a third straight session to trade around 1.2777, below SMA 200 level on the daily charts, from the days opening of 1.2795.