Eurozone services and manufacturing output shrank for a sixth straight month in July, with the downturn becoming entrenched in the core countries of Germany and France.
Markit's Eurozone Composite Purchasing Managers' Index (PMI), a combination of the services and manufacturing sectors and seen as a guide to growth, held steady at 46.4 this month, missing expectations for an uptick to 46.5.
The index has been below the 50 mark that separates growth from contraction for six months and Markit said it suggests a quarterly GDP fall of 0.6pc.
The PMI is the first euro area indicator for July to suggest that the bloc’s economy may be in a recession, defined as two consecutive quarters of contraction, after the worsening debt turmoil forced Spain and Cyprus to seek external aid last month.
"It's suggesting that things are getting worse," said Chris Williamson, chief economist at Markit."The overall picture of stabilisation is masking an increasing problem in Germany and the core is being increasingly affected by the debt crisis."
Data from Germany showed that the private sector had experienced its fastest falls in output and new business since June 2009.
Factory output fell to a 37-month low of 42.8 in July from 44.8 in June and services activity shrank to 49.7 from 49.9 in June.
In France, private sector output fell at its slowest rate in four months. A stabilisation in the services sector offset a weaker manufacturing performance.
Factory activity fell at its fastest pace in over three years, while the services sector confounded expectations by rising to a six-month high of 50.2 from 47.9 in June.
Markit said that upturn was likely temporary, citing a return to business as usual after a presidential election.
Across the eurozone as a whole, manufacturing output fell to a 38-month low of 43.6 from 44.7 in June.
Markit said output fell in response to an accelerated rate of loss of new business, which suffered the joint-second fastest rate of decline in over three years.
To meet a fall in demand, private sector firms cut their work force at the fastest pace since the beginning of 2010, according to the composite employment index which fell to 47.0 from 48.3.
A PMI for the dominant service sector rose this month to 47.6, beating expectations for 47.2 and above June's 47.1, but marked its sixth month in sub-50 territory.
“Companies across the region are cutting staff numbers at the fastest rate for two-and-a-half years as the outlook darkens," said Mr Williamson.
"Service providers are now the gloomiest since March 2009, while manufacturers are slashing their inventories of raw materials in the expectation of ongoing weak sales in coming months."
telegraph.co.uk
Markit's Eurozone Composite Purchasing Managers' Index (PMI), a combination of the services and manufacturing sectors and seen as a guide to growth, held steady at 46.4 this month, missing expectations for an uptick to 46.5.
The index has been below the 50 mark that separates growth from contraction for six months and Markit said it suggests a quarterly GDP fall of 0.6pc.
The PMI is the first euro area indicator for July to suggest that the bloc’s economy may be in a recession, defined as two consecutive quarters of contraction, after the worsening debt turmoil forced Spain and Cyprus to seek external aid last month.
"It's suggesting that things are getting worse," said Chris Williamson, chief economist at Markit."The overall picture of stabilisation is masking an increasing problem in Germany and the core is being increasingly affected by the debt crisis."
Data from Germany showed that the private sector had experienced its fastest falls in output and new business since June 2009.
Factory output fell to a 37-month low of 42.8 in July from 44.8 in June and services activity shrank to 49.7 from 49.9 in June.
In France, private sector output fell at its slowest rate in four months. A stabilisation in the services sector offset a weaker manufacturing performance.
Factory activity fell at its fastest pace in over three years, while the services sector confounded expectations by rising to a six-month high of 50.2 from 47.9 in June.
Markit said that upturn was likely temporary, citing a return to business as usual after a presidential election.
Across the eurozone as a whole, manufacturing output fell to a 38-month low of 43.6 from 44.7 in June.
Markit said output fell in response to an accelerated rate of loss of new business, which suffered the joint-second fastest rate of decline in over three years.
To meet a fall in demand, private sector firms cut their work force at the fastest pace since the beginning of 2010, according to the composite employment index which fell to 47.0 from 48.3.
A PMI for the dominant service sector rose this month to 47.6, beating expectations for 47.2 and above June's 47.1, but marked its sixth month in sub-50 territory.
“Companies across the region are cutting staff numbers at the fastest rate for two-and-a-half years as the outlook darkens," said Mr Williamson.
"Service providers are now the gloomiest since March 2009, while manufacturers are slashing their inventories of raw materials in the expectation of ongoing weak sales in coming months."
telegraph.co.uk
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