Eurozone slump deepens

Ben Southwood
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THE EUROZONE slid into yet sharper economic decline in February, according to a round of business survey figures published yesterday.

German financial minister Wolfgang Schaeuble’s claim that the worst of the crisis had past, echoed by European Central Bank president Mario Draghi, rang hollow to the bloc’s businesses, who said activity was slipping at an even faster rate than in January.

Markit’s composite purchasing managers’ index (PMI) – a prominent business survey that measures activity across the economy’s main sectors – slipped from 48.6 to 47.9 in the Eurozone as a whole, further below the 50 level that indicates no change in economic climate over the month.

This overall figure came as Ireland, Spain, Italy and even Germany saw their individual whole economy PMI worsen between the first and second months of the new year.

Italy saw its all-sector PMI slide from 45.2 to 44.2, deep below 50 and flat conditions, Spain’s PMI dipped from 46.5 to 45.3, and France’s only managed to inch up, from 42.7 to 43.1. But the French improvement only suggested a slight reduction in the steep business decline that the bloc’s second biggest economy is suffering.

By contrast, German business activity was on the rise, according to the Markit data, even after the PMI index fell from January’s 54.4 to 53.3 in February.

Markit’s Chris Williamson warned that the gloomy numbers were consistent with a further decline, this time of 0.2 per cent, in euro area GDP in the first quarter of 2013.

The downbeat overall economy figures came in tandem with data from Eurostat showing that the currency area had managed a shock increase in retail sales similar to that enjoyed by UK shops.

Eurozone retail sales were up 1.2 per cent between December last year and January this year, Eurostat said. But this jump could not overturn a yearly decline of 1.3 per cent.