Germany, the EU's leading economy and Europe's export center, appears to be heading toward an imminent recession, AFP reports.

S&P Global Market Intelligence reported that signs of an impending recession in the eurozone's largest economy are growing, releasing the eurozone Purchasing Managers' Index for October.

The 19-country PMI fell to 47.1 from 48.1 a month earlier, the fourth straight drop and the fastest decline in nearly two years, amid even higher inflation and high energy prices. Germany's PMI fell to 44.1 from 45.7 in September. A value below 50 indicates an economic slowdown.

Germany's reading was the lowest since the initial shutdown of businesses in the country when the Covid-19 pandemic broke out. The survey showed that both manufacturing and services in Germany were showing an accelerated rate of contraction, although this has not yet resulted in job losses.

German businesses were deeply pessimistic about the outlook for the year ahead.

In France, the second largest economy in the EU, the economy was stagnating, with a PMI of 50 compared to 51.2 in September. Although France is suffering less from inflation than the rest of Europe, rising prices are still putting pressure on consumers, leading to a sharp drop in factory orders.

Across the eurozone, PMIs showed factory output falling for the fifth straight month at a rate not seen since the worst of the pandemic.

Supply congestion and shortages have eased slightly amid falling demand. While demand for resources fell sharply, rising energy bills and wage pressures kept costs high.

According to S&P Global Market Intelligence chief economist Chris Williamson, a recession in the eurozone "looks increasingly inevitable." "The energy crisis in the region remains a serious problem and a brake on activity, especially in energy-intensive sectors."

The PMI data were released ahead of a meeting of the European Central Bank board, which is expected to decide on a significant interest rate cut in an attempt to lower inflation.

Inflation in the 19-country eurozone was nearly 10 percent in September, five times the ECB's target of two percent.

Germany's economy, whose energy-intensive industries relied heavily on Russian gas before the war, is projected to shrink by 0.4 percent in 2023.

Higher interest rates usually mean less business activity as credit becomes more expensive and consumer spending declines.

The EU is struggling to find ways to lower energy prices.

The International Monetary Fund said the recession in parts of Europe could turn into a deeper recession across the continent. It said government support to fight energy prices and inflation would only partially offset the problems.

The IMF has already predicted that Germany and Italy will slide into recession next year.