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Eurozone chokes as the German economy begins to weaken

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The euro area has narrowly avoided entering its third technical recession since the financial crisis

The euro area has narrowly avoided entering its third technical recession since the financial crisis

Getty Images/Creatas RF

The euro area has narrowly avoided entering its third technical recession since the financial crisis

Closely-watched indicators of the Eurozone's economic health have dashed hopes for an imminent recovery in the area, showing that expansion in the Eurozone slowed down in November.

As German factory output returns to a standstill, the powerhouse economy looks unlikely to provide much steam to the overall euro area before the year is up.

Markit's purchasing managers' index (PMI) for the currency bloc slumped from 52.1 in October to 51.4, indicating that the pace of private sector growth in the area had fallen.

While still above 50, implying that the private sector continues to grow, the reading was much weaker than the 52.3 which economists had pencilled in.

Jennifer McKeown, senior European economist at Capital Economics, described the data as "a serious blow to hopes that the recovery would resume towards the end of the year".

"The index has been probably the most reliable indicator of Euro zone GDP growth in the past and it clearly would not take much to leave this index back in recession territory", Ms McKeown said.

The euro area has narrowly avoided entering its third technical recession since the financial crisis, eking out growth of 0.2pc in the third quarter of the year, while growth estimates for the second was revised up to 0.1pc.

Still, Frederik Ducrozet, of Credit Agricole, said other indicators are "pointing to higher PMIs in the first half of 2015".

Irish Independent