Eurozone business activity still slumping

(BRUSSELS) - Private sector business activity remained weak across the eurozone in April, underscoring a gloomy medium-term outlook for the 17-state economy, a widely-watched survey showed on Tuesday.

The Markit Eurozone Composite Purchasing Managers Index registered 46.5 points, the same reading as March and well below the boom-and-bust line of 50 points indicating growth or recession.

It was the 19th time in 20 months that the survey of thousands of eurozone companies signalled a contraction in the single currency area's economy.

Both manufacturing and services sectors posted weak readings, with the powerhouse German economy seeing its first drop since November, while the French downturn eased, the researchers said.

"The survey is signalling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify further in coming months rather than ease," said Markit chief economist Chris Williamson.

Although he highlighted cooling inflationary pressures, Williamson added: "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."

Berenberg Bank economist Robert Wood noted that "the successful election of a president in Italy may resolve a little of the uncertainty. But we may be in for a rough few months before recovery takes hold again."

At Capital Economics, Ben May agreed that the latest PMI survey "provides another clear sign that a sustained economic recovery is probably still some way off."