23 May 2013 10:16 [Source: ICIS news]
LONDON (ICIS)--The recession in the eurozone economy appears to have dragged on into a seventh successive quarter, data from the Markit flash eurozone purchasing managers’ indexes (PMIs) indicate, Markit Economics said on Thursday.
The flash eurozone composite output index stood at 47.7 for May, and although this is higher than April's 46.9, it is slightly short of the “no change” level of 50.0. A figure above the 50 threshold indicates an expansion.
The manufacturing PMI in May was 47.8 (46.7 in April), the manufacturing output PMI was 48.2 (46.5 in April) and the services PMI was 47.5 (47.0 in April).
Although the data show slight improvement, the downturn in business activity looks likely to persist into June, due an ongoing decline in demand for goods and services across the region, Markit Economics said.
“The eurozone’s second recession in five years looks set to drag on into a seventh successive quarter,” said Markit’s chief economist Chris Williamson.
“Although the Eurozone PMI rose for a second successive month in May, the survey remains firmly in contraction territory and indicates that the economy is likely to contract in the second quarter at a similar rate to the 0.2% decline seen in the first three months of the year,” he added.
Weakness remains broad-based, with Germany stagnating, France contracting steeply and the rest of the eurozone also clearly entrenched in an ongoing downturn of worrying severity, although some signs of the recession easing in the periphery of the region were seen in May, Williamson said.
“Signs of deflationary pressures were also evident, highlighting just how weak demand is at the moment,” he added, noting that both manufacturers and service providers had cut their prices in the hope of stimulating sales.
“The ECB’s quarter-point cut in interest rates seems to have done little to inspire confidence that the economy will start to pick up again,” Williamson said.
“In fact, expectations about the year ahead deteriorated again in the service sector, suggesting recovery remains a long way off still and that policymakers need to do more to stem the downturn and revive growth,” he added.
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