Europe nears recession amid cost-of-living crisis

STORY: The euro zone is almost certain to enter a recession.

That's what new surveys released Monday (September 5) strongly suggest.

S&P Global's final composite Purchasing Managers' Index - or PMI - fell to an 18-month low of 48.9 in August.

Anything below 50 is a sign of contraction.

Investor morale in the bloc also fell to its lowest since May 2020.

The surveys showed the cost of living crisis is deepening and consumers are saving money as they face up to a possible recession ahead.

Services activity in Germany, Europe's largest economy, contracted for a second month running in August.

In France, services managed only modest growth, with purchasing managers saying the outlook was bleak.

Now the European Central bank is under mounting pressure, with inflation running at more than four times its 2% target.

It faces the prospect of raising interest rates aggressively just as the economy enters a downturn.

A rise in borrowing costs would add to the pain for indebted consumers.

Monday also saw the euro drop below 99 U.S. cents for the first time in 20 years.

It comes after Russia said its main gas pipeline to Europe would stay shut indefinitely.

Gas prices soared as much as 30% across Europe in response.

That only added to fears of a recession and a tough winter ahead for business and households hit hard by rising energy prices.