Euro zone Purchasing Manufacturing Index (PMI) released today show that manufacturing and services output fell to the lowest level since June 2009. The survey that was carried out by Markit Economics for the month of May printed a reading of 46.0, which was , slightly above the previously estimated 45.9.
The euro zone composite PMI has fallen for four straight months, since January’s index signaled increased output. A PMI survey under 50 points to contracting output.
The drop in the PMI numbers give evidence of slowing growth in the euro region. Germany, which is considered the strongest economy in Europe also showed contracting output. The German PMI composite fell to a 34-month low 49.3 in May, down from April’s positive 50.5 result. A decline in French and Spanish PMI composite also accelerated during May.
Markit Economics forecasts that in the second quarter, the euro zone will contract by 0.5 percent.
It is feared that the ongoing euro zone sovereign debt crisis might cause contagion to the stronger economies. G7 leaders are said to be discussing global growth issues today and there are rumours that they will also discuss ways to improve the European economy.
Euro reversed earlier gains against the dollar, declining after the economic data. EURUSD traded at 1.2413 by 09:00 GMT.