China and Euro in slowdown

 
Julian Harris
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ECONOMIC activity has slowed in the Eurozone and China, two “flash” surveys revealed yesterday.

China’s factories expanded at their slowest pace in 10 months in May, with a purchasing managers’ index (PMI) easing to 51.1 from 51.8 in April.

Eurozone area business output, meanwhile, slowed considerably this month, down from 57.8 to 55.4 in a separate PMI survey – a seven-month low.

All figures above 50 indicate some economic growth.

While expansion in Germany hit the brakes (down to 56.4 from 59.2 in April), the Eurozone core continues to massively outperform struggling peripheral economies.

“The rest of the region saw a near-stagnation of output in May and a further drop in employment,” said Markit economist Chris Williamson, painting a grim picture for Eurozone countries other than France and Germany.

In France output slipped to 60.5, from 62.4 in April, yet this was mainly dragged down by temporary factors, according to BNP Paribas.

“The main factor behind the fall of manufacturing is the collapse of actual output, which is partly due to Japanese supply issues after the quake,” said senior economist Dominique Barbet. “This part of the slowdown is likely to be corrected in the coming months.”

Across the Eurozone as a whole manufacturing growth dipped to 54.8 from 58 in April. Activity in the service sector held up stronger, down only 1.3 points, to 55.4.