"Today's dismal PMI figures clearly indicate that the euro zone economy remains in dire straits"
- Martin Van Vliet, senior economist at ING
The euro zone's manufacturing contracted in April, a sign the economy is far from out of the woods. The purchasing managers index declined to 47.9 from 49.2 in March, Markit data showed on Monday. Reading below 50.0 indicates industry contraction.
"Today's dismal PMI figures clearly indicate that the euro zone economy remains in dire straits," said Martin Van Vliet, senior economist at ING.
"Our base case scenario is still for a gradual return to modestly positive growth in the second half of this year, but with the lingering debt crisis and the ongoing drag from fiscal policy, the risks are clearly skewed to a more protracted recession."
European stocks fell sharply on Monday.
The Stoxx Europe 600 Index tumbled 2.34 per cent to 251.75. Germany's DAX Index lost 3.36 per cent and France's CAC 40 Index fell 2.83 per cent.
© Dukascopy Bank