LONDON, Sept 22 Reuters The euro zone economy will likely contract in the third quarter and won39;t return to growth anytime soon, a survey showed, even though a downturn in the bloc39;s business activity eased slightly in September.

HCOB39;s flash euro zone Composite Purchasing Managers39; Index PMI, compiled by SP Global and seen as a good gauge of overall economic health, rose to 47.1 in September from August39;s 33month low of 46.7.

While that was still below the 50 mark separating growth from contraction it beat expectations in a Reuters poll for a slight dip to 46.5.

The numbers for PMI services in the euro zone paint a grim picture, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, adding he thought the economy would 0.4 contract this quarter.

The main drag continues to come from manufacturing where the order situation deteriorated further.

September39;s fall in overall activity came despite firms barely increasing their charges. The composite output prices index dropped to 52.2 from 53.3, its lowest since early 2021.

That drop will likely be welcomed by policymakers at the European Central Bank who last week raised their key interest rate to a record high of 4 in their fight against inflation.

The services PMI rose to 48.4 from 47.9 but spent its second month below the breakeven mark this year. The Reuters poll had predicted a reading of 47.7.

With higher borrowing costs eating into indebted consumers39; disposable income they cut back…