Europe's private sector slumps
Source: Agencies |
November 5, 2011, Saturday
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Print Edition
Print Edition
PRIVATE sector activity in the eurozone shrank at its fastest pace in 28 months in October as the debt crisis sapped new business and soured sentiment, survey data showed yesterday.
Markit's composite Purchasing Managers' Index for the single currency area sank to 46.5, down from 49.1 in September and below an earlier flash estimate of 47.2. A score under 50 indicates contraction.
"(This) is the kind of level which frankly is pointing to recession," said Peter Dixon, economist at Commerzbank.
"We knew it would be bad but clearly the fact it deteriorated more rapidly than we anticipated indicates the economy is losing momentum at a faster pace. Obviously the eurozone debt crisis is leaving its imprint on the real economy."
In a bid to support the ailing economy, the European Central Bank surprised markets with a 25 basis point interest rate cut on Thursday at its first policy meeting led by Mario Draghi. Economists said there was a 50-50 chance of another cut in December, according to a Reuters poll.
Markit's Services PMI also fell sharply to 46.4 in October from 48.8 in September. The reading was the lowest since July 2009 and markedly lower than an earlier flash reading of 47.2 - the biggest downward revision from the flash reading since November 2008, when Europe was plunging into the darkest phase of the financial crisis.
The index stayed below 50 for the second month running, and survey complier Markit said conditions are unlikely to improve over the next few months.
"This suggests the euro area contracted at a worrying pace at the start of the final quarter," said Chris Williamson, chief economist at Markit.
Markit's composite Purchasing Managers' Index for the single currency area sank to 46.5, down from 49.1 in September and below an earlier flash estimate of 47.2. A score under 50 indicates contraction.
"(This) is the kind of level which frankly is pointing to recession," said Peter Dixon, economist at Commerzbank.
"We knew it would be bad but clearly the fact it deteriorated more rapidly than we anticipated indicates the economy is losing momentum at a faster pace. Obviously the eurozone debt crisis is leaving its imprint on the real economy."
In a bid to support the ailing economy, the European Central Bank surprised markets with a 25 basis point interest rate cut on Thursday at its first policy meeting led by Mario Draghi. Economists said there was a 50-50 chance of another cut in December, according to a Reuters poll.
Markit's Services PMI also fell sharply to 46.4 in October from 48.8 in September. The reading was the lowest since July 2009 and markedly lower than an earlier flash reading of 47.2 - the biggest downward revision from the flash reading since November 2008, when Europe was plunging into the darkest phase of the financial crisis.
The index stayed below 50 for the second month running, and survey complier Markit said conditions are unlikely to improve over the next few months.
"This suggests the euro area contracted at a worrying pace at the start of the final quarter," said Chris Williamson, chief economist at Markit.
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