European economic data is only getting worse.

The level of European business activity decreased once again in August, reaching its lowest point since November 2020.

Flash composite Purchasing Managers' Index for the eurozone, which was issued on Wednesday, dropped to 47.0 for August from 48.6 in July. This fell short of the economists' predicted value of 48.8.

A number over 50 indicates increased activity, while one under 50 indicates decreased activity. The most recent figures indicate the lowest reading since April 2013 if epidemic months are omitted.

With regard to the breakdown between manufacturing and services, the latter fell to a 30-month low of 48.3, while the manufacturing PMI increased somewhat from 42.7 in July to 43.7 this month.

The 20-nation region known as the "eurozone," which uses the euro as its common currency, expanded by 0.3% in the second quarter after expanding by 0.1% in the previous period. This sluggish growth demonstrates the effects of increased interest rates, rising energy costs, and weak foreign demand.

However, it also obscures significant regional disparities. For instance, Germany reported the worst decline in corporate activity in August.

What does it signify for the ECB?

The conversation over what the European Central Bank could do when it meets next month is being driven by the most recent economic statistics.

ECB President Christine Lagarde stated at the July meeting that the institution might increase or suspend rate increases. The choice will ultimately be based on fresh information.

The central bank's main rate, which is presently at 3.75%, is expected to remain unchanged next month, according to analysts surveyed by Refinitiv.

(Sources: cnbc.com, refinitiv.com)