Forexpros – Manufacturing activity in the euro zone contracted at the fastest pace since June 2009 in May, while service sector activity shrank at the steepest pace in seven months, preliminary data showed on Thursday.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index fell by 0.9 points to a seasonally adjusted 45.0 in May from a final reading of 45.9 in April.
Analysts had expected the index to ease up by 0.1 points to 49.0 in May.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
By country, Germany posted a marginal fall in combined manufacturing and services output, the first such contraction since last November and only the second in 34 months. The rate of decline in France accelerated to the fastest since April 2009.
In the rest of the euro zone the pace of contraction remained severe, and was the fastest since June 2009.
The report showed that service sector activity in the euro zone declined to the lowest level in seven months in May.
The preliminary services purchasing managers’ index dipped by 0.4 points to a seasonally adjusted 46.5 from 46.9 in April. Analysts had expected the index to ease up by 0.1 points to 47.0.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “The survey is broadly consistent with gross domestic product falling by at least 0.5% across the region in the second quarter, as an increasingly steep downturn in the periphery infects both France and Germany.”
Following the release of the data, the euro added to losses against the U.S. dollar, with EUR/USD shedding 0.44% to trade at 1.2527, the lowest since July 20010.
Meanwhile, European stock markets were mixed following the report. The EURO STOXX 50 fell 0.55%, France’s CAC 40 dipped 0.25%, London’s FTSE 100 added 0.2%, while Germany’s DAX shed 0.4%.
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