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Eurozone recession to continue into 2013, survey suggests

2012-12-05 06:50:50

The rate of contraction in the eurozone economy eased slightly in November, according to a closely-watched survey.

But the region is still in line for another quarter of recession with further contraction likely in early 2013, according to Markit, who produced the survey.

Its Eurozone Composite Purchasing Managers' Index (PMI), which measures business activity, rose to 46.5 in November from 45.7 the month before.

A score below 50 indicates contraction.

Although the figure was better than expected, there were few signs that the eurozone would climb out of recession any time soon, Markit said.

"Despite the easing in the rate of decline, the region still looks set for further contraction in the early months of 2013, as weak consumer demand in many countries combines with low levels of business confidence and falling global trade", said Chris Williamson, Markit's chief economist.

The eurozone economy shrank by 0.1% in the third quarter of the year and is forecast to shrink again in the current quarter as downturns in the services and manufacturing sectors look set to continue.

While the PMI composite index in France and Spain reached three-month highs of 44.3 and 43.4 respectively, Italy slumped to a three-month low of 44.4 in November.

Even Germany, long considered to be the eurozone's economic powerhouse, saw output continue to fall, albeit at a considerably slower rate than fellow eurozone members.

Its composite PMI figure for November was 49.2, a two-month high.

Only Ireland achieved growth in business activity, with an index score of 55.3, close to its 20-month high reached in October.