Euro zone economy likely shrank this quarter: PMI

STORY: The euro zone economy will likely contract in the third quarter, and it won't return to growth any time soon.

That was the reading from key data released Friday (September 22).

The dour outlook comes despite a slight recovery in the bloc's business activity in September.

The flash euro zone Composite Purchasing Managers' Index - or PMI - rose to 47.1 this month, up from August's 33-month low of 46.7.

The number was better than analyst forecasts, but still below the crucial 50 mark.

Anything below that level indicates contracting activity, while figures above that represent growth.

But one leading economist told Reuters the PMI services numbers paint a "grim picture".

And they saw manufacturing as the main drag on the bloc's economy.

September's fall in overall activity came despite firms barely raising their charges.

The composite output prices index dropped to 52.2 from 53.3, its lowest in two and half years.

But policymakers at the European Central Bank will likely be happy to see it come down.

Last week, they raised their key interest rate to a record high of 4% in the fight against inflation.

Services was a slight bright spot - rising to 48.4 from 47.9.

But with the figure still below 50, it suggests consumers have cut back on spending due to higher borrowing costs.

The manufacturing PMI has been beneath 50 since midway through last year.

It dipped to 43.4, when analysts had expected some improvement.