Downturn easing in troubled eurozone

There was a marked improvement in the surveys for the 17-nation bloc’s big four economies, echoing data last week that showed confidence in the eurozone improved more than anticipated in May.

Markit’s Eurozone Manufacturing Purchasing Managers’ Index rose to 48.3 from April’s 46.7, coming in ahead of an earlier flash reading of 47.8 but spending its 22nd month below the watershed 50 level that divides growth from contraction.

Still, that reading is the highest since February 2012 and is the first time the downturn has eased in four months. The PMI for Germany, Europe’s largest economy, remained sub-50 but it did improve and it was a similar story in neighbouring France, the bloc’s second biggest economy. Spanish and Italian PMIs also rose.

“Although the euro area manufacturing economy continued to contract in May, it is reassuring to see the rate of decline ease to such a marked extent,” said Chris Williamson, chief economist at Markit.

“The surveys still suggest GDP is likely to have fallen 0.2 per cent in the second quarter, extending the region’s recession into a seventh successive quarter.”

With the bloc enduring its longest recession the European Central Bank has come under growing pressure to take more action to help bring a quicker end to the downturn.