French private businesses’ activity shrinkage further in February with a sharpest fall since the Great Depression in 2009 tears down the recovery hopes in eurozone despite the steady growth of German companies, the business activity index survey shows
Hopes the eurozone might emerge from recession soon were dealt a blow yesterday, as surveys showed the downturn in the region’s businesses worsened unexpectedly this month - especially in France.
Economists had expected that yesterday’s Flash Eurozone Services PMI, a business survey and one of the earliest monthly indicators of economic activity, would add to tentative signs that a recovery is in the offing.
But the indicator fell in February to 47.3 from 48.6, marking a year below the 50 threshold for growth and confounding expectations for a rise to 49.0 from more than 30 analysts polled by Reuters, none of whom forecast such a poor reading.
PMI compiler Markit said the schism between Germany and France - the two biggest economies in the eurozone - is now at its widest since the survey started in 1998.
French companies fall, German rise
While firms in Germany sustained a healthy rate of growth, French services companies are in the midst of their worst slump since the nadir of the Great Recession in early 2009.
"If it wasn’t for Germany, these would be really dire readings. At least the Germaneconomy is still helping to keep the euro zone afloat in some respects," said Chris Williamson, chief economist at Markit.
He said the latest PMIs pointed to the euro zone economy shrinking 0.2-0.3 percent in the first quarter, following an estimated 0.4 percent contraction at the end of last year.
By far the most worrying aspect of PMIs was the dismal performance of Frenchcompanies.
Williamson said the data for France were more befitting of a struggling "peripheral" euro zone economy like Spain orItaly, rather than the "core" status it traditionally shares with Germany.
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