Eurozone PMI data 'points to new recession'

The Markit Flash Eurozone PMI Composite Output Index, which measures new orders in manufacturing and services, was 46.6 in August, compared with 46.5 in July.

A score below 50 indicates contraction.

Output declined in both the manufacturing and services sectors, Markit said in a statement.

This is the seventh consecutive month of contraction in the eurozone's private sector.

Rob Dobson, senior economist at Markit said: "The August Markit Eurozone Flash PMI reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012.

"Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook."

The eurozone's economy contracted by 0.2% in the second quarter of the year. A recession is generally defined as two consecutive quarters of negative growth.

Julien Manceaux, senior economist at ING, said: "The composite PMI still indicates a contraction of activity in the eurozone as a whole.

"In our view, this confirms that the decline in eurozone GDP [gross domestic product] in the second quarter is likely to be the first leg of a technical recession."

Even Germany, the eurozone's strongest economy, showed an accelerating decline in output, with its Composite Output Index falling to a 38-month low of 47.0, down from 47.5 in July.

The findings contrast with more positive news relating to Germany's public finances, which were back in the black for the first six months of the year, according to Destatis, the country's federal statistics office.

Germany's public accounts showed a surplus of 8.3bn euros (£6.6bn), about 0.6% of gross domestic product, thanks largely to record low unemployment figures.

But Germany's second quarter economic growth of 0.3%, down from 0.5% in the first quarter, could fall further if Markit's surveys prove accurate.

In France, decline in output slowed, with the composite PMI output index rising to a six-month high of 48.9.

Source & Image : BBC