Euro Zone Output Contracted Despite Forecasts

Euro zone services and manufacturing output shrunk, despite economists predicting an increase.

According to Markit Economics, a euro zone composite index based on a survey of purchasing managers dropped to 48.7 in march from 49.3 in February. The forecast was that economic output would rise to 49.6.

The region’s manufacturing output shrunk to 47.7 in March from 49 in February, and services declined to 48.7 from 48.8.

The region’s output contracted on the basis of declining domestic demand. A reading below 50 indicates a contraction, showing that the euro zone’s economy is sliding into recession.

Markit said that the downturn is only very mild at the moment, with the PMI signaling a drop in GDP of approximately 0.1 percent to 0.2 percent. However, a reported upturn in business confidence in the service sector provides hope that conditions may improve again later in the year.

Earlier this month, the European Central Bank raised its inflation forecasts for this year and said it expects the economy to shrink about 0.1 percent in 2012. It had previously projected an expansion of 0.3 percent.

The drop in the composite index followed the brief return to growth in January. This brings into focus the urgent need for the euro zone’s policy makers to identify ways to revive economic growth across the region.

Source: Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.