Eurozone's economy continues to deteriorate at 'alarming pace'

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The eurozone has seen an ongoing steep decline as data shows the combined economy of the 17-nations is entrenched in the steepest downturn since mid-2009.

The flash estimate out this morning by Markit shows the PMI Composite Output Index was little-changed in November (Xetra: A0Z24E - news) up to 45.8 from 45.7 in October.

October’s reading had been the lowest since June 2009.

Activity has now fallen in 14 of the last 15 months, with the exception being a marginal increase seen in January.

Chris Williamson, chief economist at Markit said the eurzone economy continued to deteriorate at an "alarming pace".

“Officially, the region saw only a very modest slide back into recession in the third quarter, with GDP falling by a mere 0.1%, but the PMI suggests that the downturn is set to gather pace significantly in the fourth quarter," he said.

"The final three months of the year could see GDP fall by as much as 0.5pc."

Output fell sharply in both the manufacturing and service sectors and, while the former saw the rate of contraction ease slightly, the latter saw business activity fall at a rate not seen since July 2009.

The ongoing drop in output reflected a further steep deterioration in new business, which fell at one of the fastest rates seen since mid-2009.

A sharper rate of decline in the services sector was partly offset by manufacturers reporting that their rate of loss of new orders had eased slightly to the weakest for eight months.

Employment also suffered a blow as it fell in the 17-nation bloc for the eleventh month in a row, with the rate of job losses running at the second-fastest rate since January 2010 as firms cut costs in the face of week demand.

Mr Williamson added that while there were some signs of stabilisation, the overall rate of decline remained "severe".

“While it is reassuring to have seen signs of stabilisation in some survey indicators, the overall rate of decline remains severe and has spread to encompass Germany, suggesting the situation could deteriorate further in the coming months," he said.

"With jobs being cut at the second-fastest rate since January 2010 and expectations for the year ahead in the services sector slumping to the lowest since March 2009, firms have clearly become increasingly anxious about the economic outlook and are seeking to control costs as much as possible. All this suggests that any swift return to growth is unlikely.”