Eurozone economy heading for steep contraction in fourth quarter: PMI

The escalating sovereign debt crisis has already pushed the eurozone economy into a contraction that could be far worse than economists had expected, business surveys suggested on Monday. Markit's Eurozone Composite Purchasing Managers Index (PMI), which measures changes in business activity across the eurozone, showed the eurozone's private sector economy contracting for the third month in a row in November.
While rising slightly to 47.0 from 46.5 in October, the PMI was still far below the 50 mark that divides growth from contraction and the latest figure was trimmed from a preliminary reading of 47.2 Survey compiler Markit said November's composite PMI put the eurozone on course for a 0.6 percent economic contraction in the fourth quarter - worse than any forecast from more than 30 economists polled by Reuters last month.
The latest data comes at the start of a week that could prove crucial in resolving a debt crisis that threatens to tear apart Europe's common currency bloc, something that could have catastrophic implications for the global economy. The latest Reuters poll of economists showed a 60 percent chance the eurozone would fall into recession. "Italy is faring the worst, with the survey suggesting that GDP could collapse by 1 percent in the fourth quarter, while both France and Spain are likely to see their economies contract by around 0.5 percent."
Williamson said Germany - the eurozone's biggest economy and the key stakeholder of any debt crisis cure - was suffering only a mild downturn at the moment, but added that a steep drop in new orders reported by factories last month signalled worse to come. The labour market in the eurozone continued to stagnate in November, the survey showed, with the composite PMI employment index staying put at 50.1. Figures last Wednesday showed the eurozone jobless rate rose slightly to 10.3 percent in October from 10.2 percent in September, although that figure says little about the dismal labour market in the bloc's periphery, with endemic youth unemployment.