Eurozone private sector activity retreated in March, providing new evidence that the 17-nation single currency area is in recession, a key survey showed on Wednesday.
The composite Purchasing Managers Index (PMI) compiled by Markit research firm hit a three-month low, dropping to 49.1 points in March compared to 49.3 in February. A score below the neutral 50-point mark indicates contraction.
The result, however, was better than a previous estimate of 48.7 points and indicates a “mild” contraction, Markit said, publishing the results of its survey which is closely watched as a leading indicator of the trend of activity.
Battling a relentless debt crisis, the eurozone took a first step toward recession when its economy shrank by 0.3 percent in the fourth quarter of 2011. A recession is defined as two consecutive months of economic contraction.
The PMI, a survey of 4,500 manufacturing and services firms, showed that Service sector business activity dropped for the second month running in March, while manufacturing output shrank for the first time in three months.
The survey also highlighted gaps between eurozone states, with Italy and Spain “firmly” stuck in recession despite slower rates of contraction.
Germany, Europe’s economic locomotive, saw growth slow down to a three-month low, Markit said.
France recorded a first contraction for four months while Ireland “was the only bright spot” with the rate of expansion reaching an 11-month high.