Even Germany feels the pain as output falls

Tim Wallace
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ALL FOUR of the largest Eurozone economies contracted last month, survey data showed yesterday, as official figures revealed retail sales are plummeting across much of the area.

Markit’s composite purchasing managers’ index (PMI) came in at a near three-year low of 46, down from 46.7 in April, indicating an accelerating decline in private sector activity.

That represents the fourth month with a PMI of below the “no change” level of 50.

Spain led the decline with a reading of 41.2, a six month low, while Italy’s 43.5 represented a two-month high.

France’s PMI fell to a 37-month low of 44.6 and Germany’s dipped below the break even level of 50 to 49.3.

Services and manufacturing both registered falls in output, with PMIs of 46.7 and 45.1 respectively.

The steady declines have impacted on employment, which fell for the fifth consecutive month.

Spain saw another “substantial” rise in firings, while headcount fell more modestly in Italy and France, and Germany saw hiring turn positive after a small fall in jobs in April.

The surveys also showed new business dropped at its fastest pace in almost three years, while intense competition and low demand continued to constrain firms’ ability to pass on rising costs on to the consumer.

Meanwhile Eurostat revealed retail sales fell 2.5 per cent in the year to April, and one per cent in the month from March.

The largest annual fall was 9.6 per cent in Spain, 9.3 per cent in Portugal and 4.6 per cent in Malta.

Elsewhere Russia’s PMI hit a six-month high, while India’s output growth rose to a three-month high.