Euro zone private sector shrinks, first time in 2 yrs

LONDON: The Euro zone’s private sector contracted for the first time in two years last month, shrinking faster than first reported as new business dried up while the debt crisis cut hopes for the future to 2-year lows, surveys showed on Wednesday.

Adownturn that began in smaller members of the 17-nation bloc has gone mainstream. Survey compiler Markit said the latest figures suggest the economy will contract in the fourth quarter unless business and consumer confidence rallies. “The malaise is spreading to the core, where surging rates of expansion earlier in the year have turned rapidly into contraction in Germany and only very modest growth in France,” said Chris Williamson, chief economist at Markit.

Markit’s Eurozone Services Purchasing Managers’ Index ( PMI) fell to 48.8 last month from 51.5 in August, its lowest reading since July 2009 and below an earlier flash reading of 49.1. It is the first month the index has been below the 50 mark that divides growth from contraction since August 2009.

The composite PMI, which combines the services and manufacturing data and is as a guide to growth, fell to 49.1 from 50.7 in August, its lowest since July 2009. The composite new business index fell to a more than two-year low of 46.5 last month, a steep drop from August’s 49.8.

The business expectations index sank three points to 54.6 from August’s 57.6, the lowest reading since April 2009.