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(Bloomberg) — Private-sector activity in the euro area has continued to shrink in September, suggesting the economy contracted in the current quarter.

An index based on surveys of purchasing managers by S&P Global showed a fourth consecutive month of falling output, hitting 47.1. While that’s a slight improvement on August, the reading is clearly below the 50 level which indicates contraction. Economists had predicted a drop to 46.5.

“We expect the euro zone to enter a contraction in the third quarter,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “Our nowcast, which incorporates the PMI indices, points to a drop of 0.4% compared to the second quarter.”

Despite dodging a recession in the wake of Russia’s invasion of Ukraine, the euro region is struggling under the weight of higher energy prices, a surge in borrowing costs and waning demand in export markets like China. While there’s agreement that the currency bloc is going through a rough patch, the European Central Bank’s latest forecasts still see the third quarter as a stagnation — not a contraction — and the economist consensus is for 0.1% growth.

Speaking on Friday, ECB Chief Economist Philip Lane said that “the overall environment remains not fragile.”

“Because of the pandemic, household’s balance sheets look in better shape than normal, same for corporates — so, that toxic mix you need in order to trigger a deep recession is not present,” he told Yahoo Finance in an interview. “We do expect to see a pickup next year and the year after which will bring the European economy to grow.”

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