Double-dip for Eurozone as it slumps again

Ben Southwood
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THE EUROZONE economy suffered an even more severe downturn in August than at first thought, survey data from Markit revealed yesterday.

The initial “flash” purchasing managers’ index (PMI) for euro area economic output in August was 46.6, marginally up on July’s 46.5 – but yesterday’s figure was 46.3. Any figure below 50 indicates contraction.

Activity was slightly more positive than output – at 47.2 – but was also lower than the initially recorded 47.5, and also deteriorated compared to July.

“The final August PMI came in...slightly below its earlier flash estimate, leaving the Eurozone economy on course to fall back into technical recession in the third quarter,” said Rob Dobson at Markit.

“Sharp declines in new orders at manufacturers and service providers, plus further job losses, mean that there is little prospect of a sustained improvement in economic conditions over the near term,” Dobson warned.

Spain suffered a particularly harsh blow, with its 54th successive month of employment decline, and overall activity still nose-diving, though the index was up 0.3 at 44.

But the pain was spread across the currency bloc, as even Eurozone powerhouse Germany felt the strain. Germany’s composite output declining faster in August, and business activity going from slight expansion in July to significant decline in August.

“The looming concern is the increasing signs of weakness coming out of Germany, the nation others were looking to as a pillar to prop up growth in the broader currency region,” Dobson added.