Euro zone recession likely deepened in fourth quarter: PMIs

Fri Dec 14, 2012 5:23am EST
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By Jonathan Cable

LONDON (Reuters) - The euro zone recession has deepened in the current quarter after the bloc's private sector contracted for the 11th straight month in December, a purchasing managers' index suggested on Friday.

While the index rose from November, it began the quarter with a reading last seen as the bloc emerged from the previous recession more than three years ago.

Markit's Flash Composite Purchasing Managers' Index, which polls around 5,000 businesses across the 17-nation bloc and is viewed as a reliable growth indicator, rose to a nine-month high of 47.3 this month, beating forecasts for a rise to 46.8.

"The official GDP data are lagging behind the PMIs so we strongly suspect that the official data will show an increasing downturn of the euro zone recession in the final quarter," said Chris Williamson, chief economist at data collator Markit.

"The data is consistent with GDP falling about 0.5 percent."

The euro zone economy contracted 0.2 percent in the second quarter and 0.1 percent in the third, meeting the technical definition of a recession.

A Reuters poll last week predicted a 0.3 percent contraction in the current period with no return to growth until the second quarter of next year. <ECILT/EU>

Indeed, the PMI has been below the 50 mark that divides growth from contraction for all but one of the past 16 months.   Continued...

A customer looks browses the meat section at a supermarket in Milan, September 5, 2012. REUTERS/Stefano Rellandini