Eurozone company surveys point to recession

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Eurozone company surveys point to recession

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More signs have emerged that the eurozone economy is likely in recession.

Company surveys reveal German and French manufacturing suffered a sharp decline in March as new orders fell.

That is a big contrast to a year ago when the region’s two largest economies spearheaded the eurozone’s recovery.

The news from the region’s huge services sector —which includes everything from banks to hotels — was also disappointing.

The index compiled by the surveys of services purchasing managers (PMI) slipped on a lack of new business.

The surveys in manufacturing and services suggested companies are focusing on cutting costs by laying off staff. Job losses mounted throughout the eurozone at the fastest pace since March 2010.

PMI compiler Markit said the data were consistent with a decline of 0.1 percent in eurozone gross domestic product during the first quarter, following on from the 0.3 percent decline seen in the last three months of 2011.

With France and Germany now struggling, Markit said it was hard to see what could drive the currency union forward in the months ahead, especially since many of its smaller countries are already in recession.

“The austerity measures implemented there are going to keep some major economies such as Italy and Spain in recession, which is going to damage the region as a whole,” said Chris Williamson, chief economist at Markit.