More gloom for eurozone economy

The eurozone seems to be heading for its second recession in three years.

The region’s economy will shrink by around 0.5 percent in the current quarter according to the latest surveys of businesses.

The Markit Purchasing Mangers’ Index (PMI) which is based on questionaires sent to thousands of companies showed the measure of manufacturing and services is in its seventh month of contraction though it was actually slightly better than a month earlier.

Most worrying, the downturn in smaller eurozone economies is moving to the larger ones – such as Germany and France.

“August’s flash eurozone PMI does nothing to challenge the notion that the single currency area is now firmly in recession,” said Jonathan Loynes, chief European economist at Capital Economics.

The eurozone economy shrank by 0.2 percent in the three months to June, according to official data. Economists polled by Reuters last week predicted a similar outcome for the current quarter, with no growth until the start of next year.

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