- Chris Williamson , chief economist at Markit
Private sector activity in the 17-nation economy contracted once again in June, although at a slower pace, suggesting the economy may emerge from its longest ever recession and finally start gaining momentum soon. The downturn in both manufacturing and services sectors eased this month, as output shrank at its slowest pace since March 2012, data provider Markit Economics reported on Thursday. Eurozone preliminary manufacturing PMI rose to 48.7 in June, slightly beating expectations of 48.6, and up from 48.3 a month earlier. A gauge of activity in services sector improved as well, with services PMI advancing modestly to 48.6 points this month, above the estimates of 47.5.
The Eurozone has been in recession for 18 months already, and according to recent data the economy is likely to shrink by a further 0.2% this quarter. However, the fact that activity in key sectors is improving and moving closer to the 50 threshold, which indicates the expansion, is making it less likely that policy makers will cut the benchmark interest rate again, or resort to other measures to stimulate growth. Despite some positive signs, there were reminders that even in the region's powerhouse, Germany, the recovery remain fragile and vulnerable, with both new orders and the number of new working places falling in June.
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