Eurozone manufacturing hit by deepening recession

Demonstrators gather around the euro logo in front of the European Central Bank in Frankfurt on ‎October 29, 2011.

Fresh data show that the eurozone’s manufacturing sector activity contracted in July at its fastest pace in three years as the bloc faces worsening debt crisis.

(PressTV) According to the Purchasing Managers Index (PMI) compiled by the London-based business research firm, Markit, the plunge was in both output and new orders.

The data indicated that the PMI for the eurozone’s manufacturing sector fell to 44 points in July which was lower than the preliminary reading of 44.1.

The sector’s recession resulted in the 11th consecutive monthly contraction in the industry.

“Manufacturing looks to be on course to act as a major drag on economic growth in the third quarter, as the eurozone faces a deepening slide back into recession,” said Markit’s chief economist, Chris Williamson.

He further added that, “The July survey is characterized by faster rates of decline in output and new orders, leading manufacturers to cut back on headcounts and inventory holdings and suggesting a fear among companies towards ongoing weakness in the coming months.”

Manufacturing sectors of the eurozone’s two biggest economies, Germany and France, slumped to a more than three-year low.

The data suggest the eurozone’s largest economies are becoming increasingly fragile which raises questions about their ability to support the bloc’s weaker nations.

Europe plunged into financial crisis in early 2008. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.

The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries including Portugal, Spain, Greece and Italy.

TNP/JR/AZ

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