Germany feels the squeeze as output declines
THE EUROZONE’S downturn has now hit Germany, influential survey data showed yesterday, leading economists to forecast a fall in GDP this quarter for the single currency area.
Services activity in the Eurozone dropped sharply according to Markit’s purchasing managers’ index (PMI) which came in at 46.5 in May, a seven-month low and well below the “no change” level of 50.
Manufacturing PMI slumped to a 35-month low of 45, from 45.9 in April, also showing a deep slump in activity.
Those combined to give a composite index of 45.9, also a 35-month low, down from 46.7 in April.
Germany’s private sector returned to contraction with a PMI of 49.6, down from April’s 50.5, composed of a manufacturing figure of 45 and some services growth at 52.2.
The country’s decline was also recorded by the Ifo’s investor confidence survey which fell sharply from 109.9 in April to 106.9 this month.
Meanwhile France’s private sector output fell at its sharpest rate for over three years, with a headline PMI of 44.7, down from 45.9 in April.
“After narrowly escaping a return to recession in the first quarter, it now appears very likely that the Eurozone economy will experience a renewed contraction in the second quarter,” said Capital Economics’ Jennifer McKeown.
“It seems clear that policymakers’ latest efforts to strengthen growth in the region are too little too late.”