| EU business activity sinks to three-year low |
BRUSSELS Euro zone private sector activity sank to the lowest level for three years in the second quarter as business sentiment deteriorated in the crisis-hit region, a key survey showed on Thursday.
The Purchasing Managers Index (PMI) compiled by business research firm Markit was stuck at 46 points in June, the same level as May, indicating another month of contraction in activity.
“The flash PMI for June rounded off the weakest quarter for three years, indicating euro zone GDP is likely to have fallen by 0.6 per cent,” said Markit chief economist Chris Williamson.
“Of particular concern is the near-record deterioration in business optimism, combined with marked falls in employment and purchasing by companies,” he said. “This suggests that firms are preparing for conditions to worsen in the coming months, with the darker outlook often attributed to uncertainty caused by the region’s ongoing economic and political crises.”
The survey of 4,500 companies in the services and manufacturing sectors showed that the economic downturn is “gathering pace and spreading” across the 17-nation euro zone, Williamson said.
He said Germany was on course for a “marginal fall” in gross domestic product in the second quarter while other nations will likely face “far steeper declines” including a drop of 0.6 per cent in France.
The survey showed that output fell in Germany, Europe’s biggest economy, for the second month in a row in June and at the fastest rate in three years.
In France, the euro zone’s second economic power, activity dropped for the fourth consecutive month although the rate of decline eased since May.
In the 15 other euro zone nations, output fell for the 13th month running and at the fastest pace since November.
Companies cut jobs for the sixth straight month as new orders and backlogs of orders continued to fall, the survey said.
Adding to the woes, European Central Bank data showed that the euro zone’s current account surplus dropped to 4.6 billion euros ($5.8 billion) in April from 10.3 billion euros the previous month.
The current account on the balance of payments, which includes imports and exports in both goods and services plus all other current transfers, is a closely tracked indicator of the ability of a country or area to pay its way in the world.
It is crucial for the long-term confidence of investors and trading partners.
Over the 12 months to April, the current account showed a surplus of 18.8 billion euros, compared with a deficit of 18.6 billion euros in the corresponding period a year earlier, the data showed.
Agence France-Presse
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