EZ Manufacturing, Services Contract Less Than Expected

Euro-area services and manufacturing output contracted at a slower pace than economists forecast in December as European leaders devise the latest plan to combat the sovereign-debt crisis, now entering its fourth year.

A composite index based on a survey of purchasing managers in both industries rose to 47.3 to from 46.5 in November, London-based Markit Economics said today. Economists had forecast a November reading of 46.9, according to the median of 16 estimates a Bloomberg News survey. A reading below 50 indicates contraction. A separate report showed European car sales fell 10 percent in November, bringing European Union registrations so far this year to a 19-year low.

Record euro-area unemployment of 11.7 percent and concern about the debt crisis is hampering consumer spending. Finance ministers yesterday declared a two-front victory over the fiscal turmoil, assuring a lifeline to Greece and laying the groundwork for a bank supervisor to prevent further crises. Government leaders early this morning pledged to seek a joint strategy for handling failing banks as the next step toward banking union. Still, the European Central Bank said in its monthly bulletin that the economic slump will extend into next year.

“I’m very concerned in the euro zone,” where “domestic credit data are contracting very, very sharply,” Julian Callow, chief international economist at Barclays Plc, said in a Bloomberg Television interview yesterday. “Unemployment is surging, there are a lot of issues. The southern European badly needs a lot more stimulus.”

Bloomberg

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