Euro zone business slump eases but second quarter contraction likely: PMI

Thu Jun 20, 2013 7:52am EDT
 
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By Jonathan Cable

LONDON (Reuters) - The euro zone's private sector slump has eased more than expected this month, business surveys showed on Thursday, but a continued slide in new orders suggested a full recovery is still some way off.

The data will come as good news for the European Central Bank as the decline eased across the 17-nation bloc.

Markit's Flash Eurozone Composite Purchasing Managers' Index, which makes up around 85 percent of the final reading and is seen as a reliable economic growth indicator for the bloc, rose to 48.9 in June from May's 47.7.

That was its highest since March 2012, and beat forecasts in a Reuters poll of 23 economists for a more modest upturn to 48.1, but the index has been below the 50 mark that separates growth from contraction for all apart from one of the last 22 months.

"The most encouraging picture is outside of France and Germany where the rest of the region is seeing the weakest rate of decline for two years - and it is only a modest decline," said Chris Williamson, chief economist at Markit.

"At this rate we should see stabilization in the third quarter and growth appearing in the fourth. It's corresponding with the view of policymakers of the second half of the year looking much better," Williamson said.

The euro zone has been in recession for a year and a half and Markit said the latest PMI data suggested the economy would contract 0.2 percent in the current quarter.

That compares to a flat outlook in a Reuters poll published last week.   Continued...

 
People wait to enter a government job centre in Madrid August 2, 2010. REUTERS/Susana Vera