Downturn in eurozone manufacturing gets worse

First Posted:

(AP) The manufacturing downturn in the 17 countries that use the euro got worse in March, a closely watched survey revealed Monday, reinforcing fears that the single currency bloc is in recession.

Financial information company Markit said its purchasing managers index a gauge of business activity fell to a three-month low of 47.7 in March from the previous month’s 49.

The survey provides further evidence that the manufacturing sector is in recession anything below 50 indicates a contraction.

Markit said the eurozone’s two powerhouse economies, Germany and France, saw activity levels deteriorate. France, in particular, fared worse with activity at a 33-month low of 46.7. Only Austria and Ireland saw output increase during the month.

Across the eurozone, Markit said, new orders contracted at a faster rate than in February and that led to further job losses.

The manufacturing sector is important for Europe’s growth prospects at a time when many countries are implementing austerity measures to get a handle on their debts.

Following a 0.3 percent quarterly economic contraction in the fourth quarter of 2011, analysts said the manufacturing data make it more likely that the eurozone will fall back into recession technically defined as two quarters of negative growth.

“The March eurozone manufacturing purchasing managers’ survey is very disappointing and reinforces belief that the eurozone suffered further contraction in the first quarter of 2012,” said Howard Archer, chief European economist at IHS Global Insight. “This would put the eurozone back into recession.”