Euro zone slump eases slightly in May, growth remains elusive: PMI

Wed Jun 5, 2013 4:03am EDT
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By Andy Bruce

LONDON (Reuters) - Euro zone business activity shrank at a slightly slower pace last month, but a chronic shortage of new orders means an economic recovery still looks some way off, business surveys showed on Wednesday.

Markit's Eurozone Composite PMI, which gauges how thousands of businesses across the region fare each month, rose in May to 47.7 from 46.9, unchanged from a preliminary reading.

Although the index improved for the second month in a row, it has been rooted below the 50 threshold that signals growth for all but one month since September 2011.

Survey compiler Markit said the figures suggest the euro zone's longest-ever recession will extend into the current quarter with a roughly 0.2 percent economic contraction.

"Policymakers and politicians will nevertheless seek solace in the fact that the rate of decline has now eased for two consecutive months, and that Germany is stabilizing," said Chris Williamson, chief economist at Markit.

"Downturns have also eased in France, Italy and especially Spain since earlier in the year."

Still, Williamson said it was hard to see what could drive a return to growth outright anytime soon, adding that stabilization is perhaps the best the euro zone economy will see in the next few months.

The recession has resulted in the highest unemployment rate in the euro zone's history, reaching 12.2 percent and leaving 19.4 million people out of work.   Continued...

An employee works on a Renault Zoe electric car on the production line at the Renault automobile factory in Flins, west of Paris, May 28, 2013. REUTERS/Benoit Tessier