Business activity in the 15 countries sharing the euro contracted in June for the first time for almost five years, according to a widely watched survey on June 23. The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, slid to 49.5 points in June, from 51.1 in May. The fall brought the index below the 50-point level indicating a contraction in activity for the first time since July 2003.
On the manufacturing front the PMI index was also down, to 49.1 in June from 51.6 in May, the worst reading since May 2006.
Economists said that the fact that business activity shrank spelled bad news for the broader eurozone economy in the months ahead. "This very much heightens concern about the current state of the eurozone economy and its prospects," said economist Howard Archer at consultants Global Insight.
Although economic activity has been slowing in the eurozone, soaring oil and food prices lifted annual inflation in the bloc to a record 3.7% in May.
Copyright Agence France-Presse, 2008