Investing.com - Manufacturing activity in the euro zone deteriorated to a four-month low in April, remaining in contraction territory for the 21st consecutive month, preliminary data showed on Tuesday.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index fell to a seasonally adjusted 46.5 in April from a final reading of 46.8 in March.
Analysts had expected the index to remain unchanged at 46.8 in April.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The report also showed that service sector activity in the euro zone inched up in line with expectations, but remained deep in contraction territory.
The preliminary services purchasing managers’ index rose to a seasonally adjusted 46.6 from 46.4 in March.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “Thanks to an upturn in the survey at the start of the year, the PMI suggests that euro area GDP fell by around 0.2-0.3% in the first quarter after a 0.6% drop at the end of last year. However, the April reading points to a 0.4% rate of decline, with downside risks.”
He added that, “The renewed decline in Germany will also raise fears that the region’s largest growth engine has moved into reverse, thereby acting as a drag on the region at the same time as particularly steep downturns persist in France, Italy and Spain.”
Following the release of the data, the euro held on to sharp losses against the U.S. dollar, with EUR/USD falling 0.6% to trade at 1.2988.
Meanwhile, European stock markets were well off the highs of the session. The EURO STOXX 50 rose 0.3%, France’s CAC 40 added 0.7%, London’s FTSE 100 tacked on 0.2%, while Germany's DAX eased down 0.2%.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index fell to a seasonally adjusted 46.5 in April from a final reading of 46.8 in March.
Analysts had expected the index to remain unchanged at 46.8 in April.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The report also showed that service sector activity in the euro zone inched up in line with expectations, but remained deep in contraction territory.
The preliminary services purchasing managers’ index rose to a seasonally adjusted 46.6 from 46.4 in March.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “Thanks to an upturn in the survey at the start of the year, the PMI suggests that euro area GDP fell by around 0.2-0.3% in the first quarter after a 0.6% drop at the end of last year. However, the April reading points to a 0.4% rate of decline, with downside risks.”
He added that, “The renewed decline in Germany will also raise fears that the region’s largest growth engine has moved into reverse, thereby acting as a drag on the region at the same time as particularly steep downturns persist in France, Italy and Spain.”
Following the release of the data, the euro held on to sharp losses against the U.S. dollar, with EUR/USD falling 0.6% to trade at 1.2988.
Meanwhile, European stock markets were well off the highs of the session. The EURO STOXX 50 rose 0.3%, France’s CAC 40 added 0.7%, London’s FTSE 100 tacked on 0.2%, while Germany's DAX eased down 0.2%.