Growth across Europe falls to 20-month low
Published 24/06/2011 | 05:00
Eurozone economic growth has seen a sharp loss of momentum, with even Germany's powerful industrial sector unable to escape the headwinds damping activity around the world.
Fears for the European economy increased yesterday, after it was revealed that growth across the continent hit the lowest rate since October 2009.
The Markit Flash Eurozone PMI -- a composite index of purchasing managers' indices in the services and construction sectors across the euro area -- dropped sharply in June, from 55.8 to 53.6.
That was the lowest in 20 months. A number over 50 signals growth, under 50 signals contraction. Analysts had been expecting a drop to only 55.2.
The big hit was in manufacturing, with output contracting for the first time since September 2009. The services sector shrank as well, albeit at a much slower pace than manufacturing.
In contrast to the trend since the recession, the rate of manufacturing expansion has fallen further below services since April, Markit said.
Markit chief economist Chris Williamson described the slow down as "worrying".
"The euro area's economic growth surge has lost momentum at a worrying rate in the past two months.
"While the average PMI reading for the second quarter as a whole suggests that the economy grew by around 0.6pc, down from 0.8pc in the first quarter, the reading for June was consistent with a quarterly growth run rate of just 0.4pc. Manufacturing growth has slowed especially sharply.
"Even German manufacturing, the driving force of the region's recovery, has seen a marked deterioration in output and new orders growth -- linked to a large extent to a severe weakening of export order book growth.
"Although prices charged for goods and services rose at an increased rate, input cost inflation slowed sharply, largely reflecting lower oil and other commodity prices. Lower costs should feed through to lower selling prices, and ultimately consumer price," added Mr Williamson.