RTTN:Eurozone Economy Contracts For Seventh Month In August
(RTTNews) - The Eurozone private sector contracted for the seventh successive month in August indicating that the economy is moving firmly into a recession. Output as well as new orders continued to shrink as a combination of austerity and financial market tension dampen both domestic and foreign demand.
The composite output index rose marginally to 46.6 from 46.5 in July, flash estimate from Markit Economics showed Thursday. The reading was forecast to remain unchanged at 46.5.
Output declined in both the manufacturing and service sectors, with manufacturers again reporting by far the steeper pace of contraction.
However, the Purchasing Managers' Index (PMI) for manufacturing rose to 45.3, a four-month high, from 44 in July. The expected reading was 44.2.
Meanwhile, the services PMI came in at 47.5, down from 47.9 in July. The index stayed below the consensus forecast of 47.7.
"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," Rob Dobson, senior economist at Markit said.
The latest decline in overall Eurozone output mainly reflected a further marked drop in new orders, Markit said.
Jonathan Loynes at Capital Economics said the survey provided yet another reminder that a chronic lack of economic growth in the euro-zone will continue to act as a major impediment to efforts to bring the debt crisis to an end.
The euro area GDP contracted 0.2 percent during the second quarter. The European Central Bank's Survey of Professional Forecasters estimates 0.3 percent GDP fall this year.
The downturn in the economy filtered through to the labor market. Staffing levels declined for the eighth straight month. Levels of outstanding business fell for the fourteenth month in a row during August.
Service sector costs continued to rise at a solid clip during August, with the rate of inflation edging up to a three-month high. Although manufacturers' average input prices fell for the third month running, the pace of deflation slowed sharply.
The picture regarding average output charges was less of a mixed bag, with price discounting reported by both the manufacturing and service sectors. The overall rate of decline was the slowest for three months.
The decline in total activity was widespread across the currency union. Both France and Germany PMIs pointed to contractions.
In Germany, private sector activity shrank at the fastest pace in 38 months. Also, it marks the fourth consecutive month of contraction. The manufacturing Purchasing Managers' Index rose to 45.1, while the services PMI dropped to 48.3.
(RTTNews) - The French private sector PMI also remained in negative territory. The composite index climbed to 48.9 from 47.9 a month ago. The service sector showed expansion, while manufacturing remained mired in recession.
