x Abu Dhabi, UAEFriday 28 July 2017

Euro zone suffers worst PMI downturn in 3 years

Euro Zone: Euro zone private sector activity suffered its worst monthly slide in nearly three years in May, according to results of a closely-watched survey released.

French President Francois Hollande, gestures as he speaks to the media during a press conference at an EU summit, at the European Council building in Brussels.
French President Francois Hollande, gestures as he speaks to the media during a press conference at an EU summit, at the European Council building in Brussels.

Euro zone private sector activity suffered its worst monthly slide in nearly three years in May, according to results of a closely-watched survey released on Thursday.

The flash Purchasing Managers Index (PMI) compiled by the London-based research firm Markit fell to 45.9 points in May, down from 46.7 in April in what amounted to the fastest rate of decline since June 2009.

Any score below the boom-and-bust line of 50 indicates economic contraction, and May's data was affected by a "marginal fall" across combined manufacturing and services output in euro powerhouse Germany -- only the second fall there in 34 months.

In number two economy France, Markit said, the rate of decline accelerated to the fastest since April 2009.

Chief economist Chris Williamson said the results were "broadly consistent with gross domestic product falling by at least 0.5 percent across the region in the second quarter" of the year, adding that "even Germany is at risk of GDP falling slightly."

London-based IHS Global Insight analyst Howard Archer said the results, the morning after an EU summit overshadowed by worries over Greece's future in the eurozone and investor flight from Spain and Italy, were "truly dismal," with the only "redeeming feature" being an easing of inflation.

"There still seems a reluctance within the European Central Bank to take interest rates below 1.0 percent, but the case to do so will become ever more compelling if eurozone economic activity does not show any sign of improvement in the near term," he added.