What's going on?

Activity in the eurozone�s private sector declined in September, signaling that the region�s economy is shrinking this quarter.

What does this mean?

The eurozone�s purchasing managers’ index (PMI) just came out, which is essentially a report card showing how companies in Europe are doing. Well, this one was far from an A+: activity in the region slipped for the fourth month in a row, falling below the 50-mark that signals real trouble. Business was bad for both the manufacturing and services industries, signposting faltering demand across the board as rising prices continue to bite. What�s more, it was Germany � usually the eurozone�s workhorse � and France that really dragged down the average.

Why should I care?

For markets: What goes up might need to come down.
Most of the world�s central banks have temporarily paused their interest rate-hiking campaigns, concerned that an overly aggressive strategy could pull economies into recessions. And because this data is a worrying indicator for Europe�s economy, it suggests that the European Central Bank may need to hold off hikes for longer or even cut rates down a tad. Earlier this year, the central bank predicted that the region�s economy would manage to grow a tiny ��but needed ��0.1% this quarter, but that�s no guarantee. No wonder, then, that the market�s already betting on economy-buoying lower rates.�

The bigger picture: You can�t escape that easily.
The UK isn�t included in those European stats, but the country�s pain is just the same. The British version of that index dropped slightly in September from the month before, staying below that dreaded 50-mark. Plus, the country�s companies are slicing jobs at the fastest rate in over a decade. Taken together, that probably reveals that the UK�s interest rate hikes have started gnawing at the economy, and that explains why the Bank of England decided to keep interest rates steady at 5.25% on Thursday.