Cyprus is not the only major concern for the European Union. The purchasing managers index (PMI) for the region plunged in March as more evidence came in that austerity may widen deficits rather than shrink them because of contraction of gross domestic products (GDPs).
The Markit Eurozone PMI Composite Output Index fell from 47.9 in February to 46.5 in March, according to the flash estimate. The decline signalled an acceleration in the rate of contraction of business activity for the second consecutive month to the steepest experienced for four months.
With the exception of a marginal increase in January of last year, business activity has fallen continually since September 2011. Manufacturing output fell in March at the fastest rate since December, while business activity in the service sector suffered the steepest decline since October.
Companies also reported that new business levels fell at the strongest rate for three months, dropping at the fastest rates since December and September in manufacturing and services respectively.
Employment fell for the fifteenth successive month, reflecting the need to reduce capacity in line with the ongoing deterioration in inflows of new orders and a further marked decline in backlogs of uncompleted orders. The rate of job losses eased slightly for the second month in a row, and was broadly in line with the average seen throughout last year. Rates of job losses eased in both manufacturing and services.
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