LONDON: The euro zone's private sector slump deepened in April at a faster pace than any economist polled by Reuters predicted, dampening hopes the region will emerge from recession soon, surveys showed on Monday. Shrinking order books and rising job losses hobbled both manufacturing and service sector businesses, according to Markit's purchasing managers' indexes (PMIs), which have a good record of tracking economic growth. April's PMI for the euro zone's dominant service sector fell to 47.9 from 49.2 in March - a five-month low and worse than any forecast in a poll of more than 40 economists which projected a rise to 49.3. The services PMI slipped further below the 50 threshold that divides growth from contraction in April, while factories endured their worst month since June 2009. "We were saying last month that we probably had a second consecutive quarter of decline (in business activity), making a recession - now that's extending into a third quarter," said Chris Williamson, chief economist at PMI compiler Markit. Order books brought no joy for services companies in April, with the services new business index slumping to a six-month low of 45.4, from 47.6. "There are no real drivers of growth here, which suggests that although the overall rate of decline is modest at the moment, we could see it continue to worsen in coming months." Meanwhile, Spain's economy plunged into recession in the first quarter of 2012, shrinking by an estimated 0.4 per cent, the Bank of Spain said on Monday. It was the second straight decline in economic output after a 0.3-per cent contraction in the previous quarter, the central bank said in a report, citing heightened financial tensions. Economists polled by Reuters last week estimated the euro zone economy shrank 0.2 per cent in the first quarter, and will contract 0.1 per cent this quarter. Williamson also drew attention to the very severe contraction taking place in euro zone economies outside France and Germany, inevitably raising questions about the effectiveness of harsh austerity measures. "Tax revenues are going to be low, and unemployment is going to carry on rising, so are these deficit fighting policies working?" he said The euro zone's manufacturing PMI also came in below all forecasts from economists, plumbing 46.0 in April - its lowest reading since June 2009 and down sharply from 47.7 in March. On the plus side, the factory PMIs suggested inflation pressures are easing following a rise associated with oil prices earlier in the year, with the output price index hitting a six-month low of 50.5, from 51.2 in March. "It does suggest that policymakers ought to be more concerned about the growth outlook than the inflation outlook at the moment. Demand is so weak that companies just can't push through price rises," said Williamson.

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