Euro zone flash manufacturing purchasing manager’s index (PMI) was released today, indicating that business activity in the euro zone is slowing down, to reinforce concerns that Europe is heading into a recession.
The euro zone flash manufacturing PMI for the 17-countries using the euro, fell to 49.0 in February from 48.8 January, indicating continued contraction despite a marginal move up. A reading below 50 indicates a contraction, above indicates expansion. The data was below forecasts of 49.4
Concerns over the euro zone’s growth prospects are centered on the sovereign debt crisis that has forced Greece, Portugal and Ireland to take billions of euros in bailout funds after their borrowing costs soared out of control.
Just this week euro-zone finance ministers agreed on a new 130 billion euro bailout for Greece in an attempt to tackle the crisis. However the austerity measures that these and other governments are pursuing to cut their debts are likely to suppress growth for some years to come.