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Eurozone recession 'inevitable'
Source: Agencies |
December 16, 2011, Friday
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Print Edition
Print Edition
THE decline in the eurozone's private sector eased a little this month, but a recession still looks inevitable with the region's periphery struggling badly, according to a key business survey yesterday.
Markit's Eurozone Composite Purchasing Managers' Index, which measures the activity of thousands of eurozone companies, rose for a second month in December to 47.9 from 47.0, confounding expectations for a fall to 46.5.
But the preliminary reading lingered well below the 50 mark that divides growth and contraction for a fourth month.
Markit said France and Germany were responsible for the improved headline figure, while debt-laden peripheral countries remained firmly in contraction territory.
"It's an encouraging sign that it didn't fall any further," said Chris Williamson, chief economist at Markit. He pointed to steep falls in new orders and very low levels of confidence about the year ahead in the services industry as reasons to expect further decline.
"Whether the rates of decline continue to moderate or accelerate is largely in the hands of the political leaders, and financial markets in their reaction to any changes in the sovereign debt situation," Williamson said.
Last Friday, European leaders took a historic step towards fiscal union at a summit, but economists warned this would do little to repair a debt crisis that is choking off market funding for Spain and Italy.
Williamson said further weakness in these peripheral economies could yet knock the stronger core economies of France and Germany off track.
One bright spot was the jobs index, rising to 50.9 from 50.1.
Markit's Eurozone Composite Purchasing Managers' Index, which measures the activity of thousands of eurozone companies, rose for a second month in December to 47.9 from 47.0, confounding expectations for a fall to 46.5.
But the preliminary reading lingered well below the 50 mark that divides growth and contraction for a fourth month.
Markit said France and Germany were responsible for the improved headline figure, while debt-laden peripheral countries remained firmly in contraction territory.
"It's an encouraging sign that it didn't fall any further," said Chris Williamson, chief economist at Markit. He pointed to steep falls in new orders and very low levels of confidence about the year ahead in the services industry as reasons to expect further decline.
"Whether the rates of decline continue to moderate or accelerate is largely in the hands of the political leaders, and financial markets in their reaction to any changes in the sovereign debt situation," Williamson said.
Last Friday, European leaders took a historic step towards fiscal union at a summit, but economists warned this would do little to repair a debt crisis that is choking off market funding for Spain and Italy.
Williamson said further weakness in these peripheral economies could yet knock the stronger core economies of France and Germany off track.
One bright spot was the jobs index, rising to 50.9 from 50.1.
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