Euro zone recession eases on factories

By Pan Pylas | June 24, 2009, Wednesday |

Print Edition

THE recession in the 16 countries that share the euro eased slightly in June as conditions in the crucial manufacturing sector improved, surveys claimed yesterday.

Financial information company Markit said the purchasing managers index - a gauge of business activity - for the manufacturing sector rose in June to 42.4 from 40.7 in May.

The improvement indicates that the scale of the contraction in the sector diminished during the month. Though any reading below 50 indicates contraction, the nearer the 50 the lower the output drop.

The better performance in the manufacturing sector contrasted with what occurred in the services sector. Its purchasing managers index fell to 44.5 in June from 44.8 in May.

Combining the two, the composite purchasing managers index rose modestly to 44.4 in June from 44 the previous month. June's reading was the highest since last September, when the most acute phase of the financial crisis began in the wake of the collapse of United States investment bank Lehman Brothers.

Yesterday's figures add weight to the argument that the worst of the euro zone recession has passed but that recovery will take time.

The manufacturing sector is particularly important to the euro zone economy - the main reason behind the 2.5 percent economic contraction in the first quarter was a collapse in demand for high-value exports, such as cars and heavy machinery from nations such as Germany.

Economy

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Euro zone recession eases on factories

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