06:02 AM EDT, 09/23/2024 (MT Newswires) -- Last month saw an uptick in eurozone services PMI, which was mainly due to French optimism related to the Olympics, said ING.

However, now that those Games are over, service sector sentiment has resumed its downward trend, wrote the bank in a note. Monday the services PMI dropped to 50.5 in September, indicating broad stagnation in activity. Manufacturing output also fell, from 45.8 to 44.5.

An all-round bad end to the quarter which, to ING, means that gross domestic product growth has likely weakened from its already modest 0.3% quarter-on-quarter pace.

The inflation outlook looks markedly better as the PMI indicates rapidly slowing input cost inflation for businesses, stated the bank. This is the case for both services and goods, despite still high wage growth and transportation costs. In turn, the lower cost growth results in slowing selling price inflation.

With the release of the former European Central Bank President Mario Draghi's report, concern about weak eurozone activity has increased, according to ING. While Draghi's concerns are structural, the cyclical state of the eurozone economy perfectly illustrates why the European Union needs a boost in growth.

After the stagnation that followed the energy price shock, the eurozone economy is now barely experiencing any recovery. With inflation now close to the ECB target of 2% again, the main concern is shifting from inflation to growth, added the bank.