Forexpros – Manufacturing activity in the euro zone deteriorated in April, growing at the slowest pace since June 2009, preliminary data showed on Monday.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index fell by 1.7 points to a seasonally adjusted 46.0 in April from a final reading of 47.7 in March.
Analysts had expected the index to ease up by 0.5 points to 48.2 in April.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
By country, growth slowed to only a very modest pace in Germany, showing the weakest expansion in the current five-month sequence, while France saw output fall for the second month in a row, with the rate of decline accelerating to the fastest since October.
The big-two euro countries nevertheless continued to outperform the rest of the region where output fell sharply, down for the eleventh successive month and at the fastest pace for four months.
The report showed that service sector activity in the euro zone declined to the lowest level in five months in April.
The preliminary services purchasing managers’ index dipped by 1.3 points to a seasonally adjusted 47.9 from 49.2 in March. Analysts had expected the index to ease up by 0.2 points to 49.4.
New business at service providers fell for the eighth successive month, showing the largest deterioration since October.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “The flash PMI signaled a faster rate of economic contraction in the euro zone during April, extending what appears to be a double-dip recession into a third consecutive quarter.”
“The situation deteriorated across the region. Germany saw growth weaken to near-stagnation, while France saw a worryingly steep downturn. The rate of decline also regained momentum in the periphery.’
Following the release of the data, the euro added to losses against the U.S. dollar, with EUR/USD shedding 0.58% to trade at 1.3141.
Meanwhile, European stock markets plunged after the open. The EURO STOXX 50 tumbled 2.2%, France’s CAC 40 plummeted 1.85%, London’s FTSE 100 declined 1.6%, while Germany’s DAX dropped 2.45%.
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