LONDON (Reuters) – Businesses across the euro zone performed much worse than expected this month as factory activity contracted at the fastest pace in nearly six years, hurt by a big drop in demand, a survey showed on Friday.
While a downturn in manufacturing was partly offset by stable – yet relatively weak – growth in the euro zone’s dominant services industry, the surveys suggested the bloc’s economy had a poor first quarter.
Central - Bank - Change - Tack - Month
That supports the European Central Bank’s change of tack earlier this month. It pushed out the timing of its next post-rate increase until 2020 at the earliest and said it would offer banks a new round of cheap loans to help revive the economy.
IHS Markit’s Flash Composite Purchasing Managers’ Index, which is considered a good guide to economic health, dropped to 51.3 this month from a final February reading of 51.9, missing a Reuters poll median expectation for 52.0.
Manufacturing - Area - Weakness - Concern - Moment
“Manufacturing is clearly the main area of weakness and concern at the moment. The manufacturing downturn is gaining momentum and will act as an increasing drag on the economy in the second quarter,” said Chris Williamson, chief business economist at IHS Markit.
“To what extent can the services sector come to the rescue? It certainly helped prop up the economy in the...
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