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Euro factory growth: steepest fall since 2008

01 June 2011, 22:22 CET
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(BRUSSELS) - A key indicator of eurozone manufacturing health in May registered its steepest fall since the height of the financial crisis in November 2008 , suggesting recovery has lost significant momentum.

The eurozone manufacturing purchasing managers' index produced by London-based researchers Markit fell from April's 58.0 to 54.6, below an earlier estimate.

Although any score above 50.0 indicates growth, the slowdown in the rate produced a seven-month low.

It was blamed on "slower rates of output, new orders, employment and inventory accumulation," right across the board, with remaining growth "heavily centred" on blue-chip eurozone economies in Germany, France, the Netherlands and Austria.

The deterioration was "broad-based" and "particularly worrying," Markit chief economist Chris Williamson said, with Spanish manufacturing sliding back into contraction, quickening decline in Greece and disappointingly weak expansions in Italy and Ireland.

The data "reinforces suspicion that eurozone economic activity is losing momentum and GDP growth is set to slow appreciably from the 0.8 percent quarter-on-quarter rate achieved in the first quarter," said London-based IHS Global Insight analyst Howard Archer.

He said that the European Central Bank would likely wait until July to raise benchmark interest rates from the current 1.25 percent, having earlier suggested June was possible.


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