Eurozone suffers worst PMI downturn in 3 years

Eurozone private sector activity suffered its worst monthly slide in nearly three years in May, a survey showed Tuesday, with "alarmingly steep" declines in Spain, Italy and now also France. The full Purchasing Managers Index (PMI) compiled by the London-based research firm Markit fell to 46.0 points in May, down from 46.7 in April in what amounted to the fastest rate of decline since June 2009. Any score below 50 indicates economic contraction, with the latest reading of the closely-watched survey of buying activity showing recession in the debt-laden eurozone periphery clearly now eating into the core. The final score was a shade better than the first estimate of 45.9 points but the results showed that German output fell for the first time since November and that downturns in France and Spain accelerated, with Italy firmly mired in a steep downturn. France posted a 37-month low of 44.6 points, with Spain languishing on 41.2 points. Italy's score rose, but only to 43.5 points. "Companies report business activity to have been hit by heightened political and economic uncertainty, which has exacerbated already weak demand," said Markit chief economist Chris Williamson. "While Germany is contracting only marginally, alarmingly steep downturns are evident in Spain, Italy and now also France." London-based IHS Global Insight analyst Howard Archer said the "dismal" data "intensifies the pressure on the European Central Bank to cut interest rates further, and sooner rather than later."