Eurozone index shows signs of downturn bottoming out
TENTATIVE signs the eurozone may have passed the worst of its downturn emerged in December, but business surveys also suggested Britain's economy tipped back into contraction in the final months of 2012.
Yesterday's purchasing managers indexes, which measure the activity of thousands of companies worldwide, brought mixed news from Europe.
Activity in Britain's dominant services sector fell for the first time in two years and at a faster pace than predicted by any analyst polled by Reuters, while the speed of decline among French, Italian and Spanish firms slowed.
Data from the US showed continued but modest jobs growth and a steady expansion of its services sector. With Chinese growth showing evidence of revival, that leaves Europe as the world's economic slowcoach.
In particular, economists were surprised by news the UK services PMI slipped to 48.9 in December from 50.2 last month, sagging below the 50 mark that divides from contraction for the first time in two years.
Survey compiler Markit said the figures suggest Britain's economy shrank 0.2pc in the final quarter of 2012, a slightly bigger drop than most other private-sector forecasts.
The eurozone composite PMI hit its highest levels since last March, rising to 47.2 in December from 46.5 in November, although it remained rooted below the 50 mark for an 11th month.
"I think (the eurozone PMIs) are showing a decisive bottoming-out of activity," said James Nixon, chief European economist at Societe Generale. "Now, the actual levels of the surveys are still consistent with GDP declining, but at least things aren't getting worse any faster."
The decline eased among the services firms that make up the bulk of the eurozone's economy, ranging from banks to restaurants, but manufacturers endured an awful end to 2012.
Survey compiler Markit warned that yesterday's figures would probably fail to prevent the eurozone's recession deepening in the fourth quarter of last year, thanks to dismal figures in October and November. (Reuters)