Eurozone Business Activity Drops to Almost Five-Year Low

Manufacturing Index also down

Business activity in the 15 nations sharing the euro slowed in May to a 58-month low, due in part to the first drop in new business recorded since mid-2003, according to a widely watched survey released May 22. The eurozone's purchasing managers' index (PMI), compiled by NTC Research, slid to 51.1 points, from 51.9 in April, according to an initial estimate. A figure above the 50-point level indicates a growth in activity, while any figure below it signifies a contraction.

On the manufacturing front the index was also down, to 50.5 in May from 50.7 in April, though this May figures was marginally better than the analysts' predictions.

The figures provide "further evidence that activity looks set to slow reasonably sharply in the second quarter," said Ben May, European economist at Capital Economics.

At the country level, the German index was flat, suggesting that the economy remains resilient to the global downturn and strong euro, he added. More worryingly the French composite PMI continued to slide, consistent with stagnant GDP and suggesting that the slowdown in southern Europe could be starting to spread.

The Royal Bank of Scotland said that the deterioration in growth reflected a contraction in the amount of new business placed at manufacturing and service sector companies. The drop in new business, though marginal, is the first recorded since July 2003.

Copyright Agence France-Presse, 2008

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