Activity in the euro zone’s manufacturing and services sectors slowed, defying expectations, as domestic demand fell and indications pointed to the region entering recession.
The purchasing managers’ index fell to 48.7 in March from 49.3 in February, Bloomberg reported. Economists surveyed by Dow Jones Newswires had expected a rise to 49.6.
The drop “is clearly a disappointment following the brief return to growth seen in January, and suggests that policymakers will need to seek ways to revive economic growth across the region again,” Chris Williamson, chief economist at Markit, which produces the index, said in the report.
This is the sixth decline in business activity in the past seven months, with output averaging a downward trend over the first quarter. Incoming new business dropped for the eighth month in a row and fell at the fastest rate since December. New orders also fell, causing a drop in work backlogs.