Eurozone still feels economic pain

The downturn across eurozone businesses eased slightly this month, although a dearth of new orders means the bloc’s economy is likely to contract again in the second quarter, business surveys showed yesterday.
By The Newsroom
Published 24th May 2013, 01:01 BST

Markit’s flash Eurozone Services PMI, which surveys around 2,000 companies ranging from major banks to caterers, rose in May to 47.5, a three-month high, from 47.0 in April.

While that was a little better than economists polled by Reuters expected, the PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.

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French companies continued to fare poorly this month, while activity in German firms effectively stagnated.

Overall, survey compiler Markit said the surveys pointed to a similar economic performance in the second quarter as the 0.3 per cent contraction the eurozone logged in the January-March period. “There are signs the rate of decline is easing, which does suggest we may be moving into a period of stabilisation, but it’s taking a lot longer than most people anticipated,” said Chris Williamson, chief economist at Markit.

“It’s looking more like the end of the year (until) we’re going to see the numbers start to show signs of stabilising.” The new orders services index fell to 45.3 from 46.2, meaning a big upturn in the PMI next month looks unlikely.