Data released today has shown order books contract for the 19th time in the last 20 months as Eurozone composite PMI remained at 46.5 in April (a number below 50 implies a contraction). Manufacturing slid unexpectedly from 46.8 to 46.5 while services ticked up slightly from 46.4 to 46.6 as anticipated.
Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:
Although the PMI was unchanged in April, the survey is signalling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify further in coming months rather than ease.
Thanks to an upturn in the survey at the start of the year, the PMI suggests that euro area GDP fell by around 0.2-0.3% in the first quarter after a 0.6% drop at the end of last year. However, the April reading points to a 0.4% rate of decline, with downside risks. Worryingly, the rate of loss of new business gathered further momentum, suggesting that activity and employment could fall at steeper rates in May.
German data earlier showed an unexpected decline in both manufacturing and services, as April's survey implied that now sectors are both contracting. Chris Williamson commented on the development:
The renewed decline in Germany will also raise fears that the region’s largest growth engine has moved into reverse, thereby acting as a drag on the region at the same time as particularly steep downturns persist in France, Italy and Spain.