Monday, 30 May 2011

Eurozone economy shows signs of slowing

After accelerating in the first quarter, the economy in the euro area may have slowed in the second quarter.

In the first quarter of 2011, the eurozone economy grew by 0.8 percent, accelerating from an increase of 0.3 percent in the fourth quarter of last year.

Surveys of businesses and consumers conducted by the European Commission indicate that the economy has slowed since then. The findings of the latest survey were released on Friday and it showed that that the Economic Sentiment Indicator fell to 105.5 in May from 106.1 in April.

The ESI has fallen 2.5 points since it peaked at 108.0 in February. This is the largest three-month fall in the indicator since March 2009 when the economy was still in recession.

For the individual sectors, the indicator for industry fell to 3.9 in May from 5.6 in April, services fell to 9.2 from 10.4, retail trade fell to -2.5 from -1.8 and construction fell to -24.6 from -24.3. Only the consumer sector improved with its indicator rising to -9.8 from -11.6.

Among the major euro area economies, the ESI for Germany slipped by 0.1 but fell by 1.9 for France and 2.7 for Italy.

Another indication of a slowing eurozone economy had come at the beginning of last week. Markit Economics had reported on Monday that its flash eurozone composite output index had fallen to a seven-month low of 55.4 in May from 57.8 in April. The flash manufacturing PMI fell to a seven-month low of 54.8 in May from 58.0 in April while the services index fell to a five-month low of 55.4 from 56.7.

The fall in the composite index in May was the biggest since November 2008 when the economy was deep in recession.

1 comment:

Chris Ricci said...

There's still a great chance for the Eurozone to speed up. As of the first week of May this year, Germany has already shown some improvements for the past months with their exports around Europe and other parts of the world; although China has replaced Germany as the world's top exporter. Perhaps we still have to wait and see for another surprise from these export giants.

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