Thu, Apr 05, 2012 - Page 11 News List

Eurozone service sector still in recession

Reuters, LONDON

The eurozone’s services business remains mired in a mild recession, but activity is perking up in Britain and is more robust in Asia, according to data released yesterday that underscored widening fault lines in a plodding global economy.

Sagging orders kept eurozone businesses in the doldrums last month, although companies became more confident that better times lie ahead, a survey showed. That contrasted with evidence of a slowdown in India and wilting business confidence.

The uneven data come a day after markets were jolted by news that the US Federal Reserve, while guarded on the clearly brighter economic prospects, looks far from considering any more stimulus for the world’s largest economy.

Given that there are no concrete plans to stimulate growth in debt-ridden Europe, the onus remains firmly on developing nations, such as China and India, which are slowing, to carry world economic growth.

Markit’s Eurozone Composite Purchasing Managers Index (PMI), which gauges how thousands of companies — from banks to hairdressers and restaurants — fare each month, edged down to 49.1 last month from 49.3 in February, slipping further below the 50 mark that divides growth from contraction.

Although that was better than a preliminary reading of 48.7, survey compiler Markit said it probably consigned the eurozone to recession, defined as two consecutive quarters of contraction in GDP.

“[It] suggests that the first quarter of 2012 was not as bad as the final quarter of 2011, but the last two months of surveys have been well below the upturn promised in January,” said Janet Henry, European economist at HSBC PLC. “The strength of service sector business confidence raises hope for a future recovery.”

The services PMI, measuring the fortunes of the services sector was a little less gloomy than originally portrayed, rising to 49.2 from 48.8 in February, a substantial upward revision from the 48.7 flash reading for last month.

Britain’s services PMI, taken together with manufacturing data earlier this week that also showed a better performance than the eurozone, suggested Britain’s economy expanded by 0.5 percent in the first quarter, Markit said.

Employment in the services sector fell across the eurozone for a third month, although Germany bucked that trend by posting its best upturn in jobs in the year to date, it added.

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