Eurozone set to stay in recession, survey finds

The eurozone economy looks set to remain in recession for the foreseeable future, following a stronger than anticipated decline at the start of the second quarter of the year.

The latest monthly purchasing managers’ index for the region — published yesterday by London-headquartered financial information services provider, Markit Group — showed a reading of 47.4 points for April. This represented a five-month low and was down from a reading of 49.1 points in March.

The index suggested a faster rate of decline in the region’s private sector economic activity than anticipated for the month and means that output has now fallen seven times in the last eight months.

“Prospects do not look good. Business confidence slumped lower and companies cut headcounts at the fastest rate since early 2010, in order to reduce capacity to meet lower workloads,” according to Chris Williamson, chief economist at Markit.

“The situation deteriorated across the region. Germany saw growth weaken to near-stagnation, while France saw a worryingly steep downturn — linked, in part, to increased uncertainty due to the presidential elections.

“The rate of decline also regained momentum in the periphery, which will inevitably raise concerns about the impact of deficit-fighting austerity measures,” Mr Williamson added.

That said, Germany and France both continued to outperform the rest of the eurozone, where output fell for the 11th successive month and at the fastest rate for four months.

Mr Williamson said that the speeding up of economic contraction in the eurozone extends “what appears to be a double-dip recession” into a third consecutive quarter.

“With price pressures easing, the PMI survey suggests that policymakers will worry about growth rather than inflation in coming months.”

The latest Markit data also showed that new business inflows, for the eurozone, fell for the ninth straight month in April, and registered their steepest decline since last October.