Euro zone economic recovery worsens in October

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Euro zone economic recovery worsens in October

The euro area's top two economies worsened in October, with Germany's downturn intensifying and France failing to grow for the first time in 19 months.

Flash purchasing manager indexes showed a composite reading of 44.1 for Germany -- down from 45.7 -- while the French gauge fell to the 50 threshold that separates expansion from contraction. Both were worse than anticipated, according to analysts.

Germany is probably already in a recession as Russia invades Ukraine and the ensuing energy crisis weighs on the manufacturing powerhouse. Europe's biggest economy shrank by 0.2% in the three months through September, and the country isn't expected to grow again until the second quarter of next year, according to data due Friday.

The flash PMI data shows the downturn in German business activity at the beginning of the fourth quarter, adding to the growing signs of an imminent recession in the euro zone s largest economy, said Phil Smith, an economist at S&P Global.

France, which will probably only start shrinking this quarter, still saw services expand, with S&P Global spokesman Joe Hayes highlighting a relative degree of resilience in this sector, though the demands on services to drive overall economic growth across France are rapidly becoming too large. The figures for the euro area as a whole are due later Monday, with economists predicting another negative reading. Both the UK and the US data are likely to show contractions. Australia's reading was below 50, while Japan grew again.

With help from Mark Evans and Harumi Ichikura.

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