Tuesday, August 23, 2011

Eurozone Services, Factories Hit As Germany Weakens


The eurozone's dominant service sector was effectively stagnant this month after two years of growth while manufacturing activity shrank for the first time since September 2009, key surveys showed on Tuesday.

The surveys point to a flat quarterly GDP growth and adds to signs that an economic slowdown is spreading beyond the periphery and taking root in core members of the bloc, including Germany. The Purchasing Managers' Index (PMI), which measures activity of firms ranging from restaurants to banks, has now been above the 50 mark that divides growth from contraction for two years.

"Manufacturing is struggling but that has been joined by a weakening of services sector growth. The outlook for the service sector has also fallen sharply," Mr Williamson said. Earlier data from Germany, Europe's largest economy, showed its manufacturing sector grew faster than expected but growth in its service sector nearly ground to a halt. In France the service sector unexpectedly picked up pace but factory activity declined for the first time in over two years. The grim numbers come on top of fears that the United States, the world's largest economy, will slide back into recession and after earlier flash data showed activity in China's manufacturing sector shrank in August for a second month running.

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