Eurozone May Have Marked New Recession

The eurozone economy may have posted its second successive quarter of contraction, leading to the possibility that the continent is entering a second recession. The Markit Eurozone Composite PMI Index fell to 49.3 in February, down from 50.4 in January, below an earlier estimate of 49.7.

According to Markit’s chief economist:

With business activity falling again in February, and to a slightly greater extent than the earlier flash PMI signalled, it remains a close call as to whether the Eurozone contracted for a second successive quarter, sending the region back into recession.

The drops in Spain and Italy are particularly worrisome:

… ongoing steep declines signalled by the weak surveys for Italy and Spain suggest that a return to growth for these countries still looks to be a long way off. Companies there are still slashing employment and cutting prices to help stay in business. Persistent weakness in countries such as Italy and Spain will also subdue any growth in other euro area countries which traditionally depend on trade within the region, constraining recoveries in Germany, France and other northern euro nations.

The Markit press release is available here.