Recession fears as eurozone service sector shrank in February
THE EUROZONE’S service sector shrank unexpectedly this month fuelling fears of recession.
Markit’s eurozone purchasing managers index fell to 49.4 from 50.4 in January – the area’s economy contracted by 0.3pc in the last quarter of 2011 so a second quarter of contraction would mean the region is technically in a recession.
"There is a possibility GDP will be flat but chances are we could easily slide back into a very small contraction," said Chris Williamson, chief economist at Markit.
The eurozone's manufacturing sector was also weak, with the PMI barely rising to 49 from January's 48.8, spending its seventh month below 50 and missing expectations for a faster rise to 49.5.
"We need order growth to pick up but it is still in decline, they are still relying on their pipeline of previous orders to sustain these levels of activity. In the service sector they are stimulating demand through price cuts, manufacturers are also squeezing their margins," Mr Williamson said.