The final figure of euro zone services PMI showed a slight downward revision com-pared to the first release. Services PMI was downwardly adjusted from 49.1 to 48.8, compared to a reading of 51.5 in August. National details show that weakness was led by Italy (45.8 from 48.4) and Spain (44.8 from 45.2). Germany contracted for the first time since July 2009 as the final figure showed a downward revision to 47.9 from 50.3. In France, growth slowed significantly, even more than suggested by the first reading (51.5 vs 52.5). Ireland was the only region to see a faster rate of expansion than in August, providing further evidence that the country is recovering from its cri-sis. New business for the overall euro area, fell for the first time in more than two years in September and backlog of work fell at the fastest pace since November 2009. Employment on the contrary, continued to rise, but at the slowest pace in 11 months. In the euro zone services sector, activity fell for the first time in over two years and the decline in new business suggests that weakness will persist in the coming months. Even more, the weakness is spreading to the core countries.
Euro zone retail sales fell back in August, in line with expectations, after two con-secutive monthly increases. On a monthly basis, retail sales dropped by 0.3% M/M due to weakness in non-food products (-0.6% M/M), while sales of food, alcohol and tobacco rose slightly (0.1% M/M). Due to the worsening debt crisis, stress on fi-nancial markets and bleak economic outlook consumer sentiment deteriorated sharply in August, which might have encouraged consumers to scale back spending.