The eurozone’s downturn has eased slightly, but businesses continue to suffer from a chronic lack of new orders, which should inhibit any meaningful near-term recovery.
As a result the region is likely to remain in recession in the second quarter of 2013.
Surveys of companies – both in the manufacturing and the services sector – pointed to a similar contraction to the 0.3 percent one the eurozone suffered between January and March.
Markit’s flash Eurozone Services PMI, which surveys the purchasing managers at around 2,000 companies ranging from major banks to caterers, rose in May to 47.5, a three-month high, from 47.0 in April.
While that was a little better than economists expected, the PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.
“We see this as confirmation of our expectation that the eurozone economy will end its downtrend in the spring,” said Christoph Weil, analyst at Commerzbank.
“That said, a noticeable recovery is still not in sight; the economy will only grow slightly in the coming quarters and it will continue to feel like a recession.”
French business slump
The numbers from France were particularly weak.
Markit said its preliminary composite purchasing managers index was unchanged in May at 44.3, far below the 50-point line dividing expansions in activity from contractions.
Markit chief economist Chris Williamson said business activity remained far too subdued to declare the end of the downturn in sight.
“There is just a lack of belief that the situation is going to improve any time soon. There is strong dissatisfaction with the government and its handling of the economy.”