Euro zone faces downturn since 2009

LONDON

The euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Service sector firms like banks and hotels that comprise the bulk of the economy fared particularly badly this month, and laid off staff at a faster pace.

While the monthly rate of decline that manufacturers reported eased far more than economists anticipated, Markit's latest Purchasing Managers' Indexes (PMIs) pointed to little change overall for a recessionhit euro zone this month.

The flash service sector PMI fell to 45.7 this month, its lowest reading since July 2009, the survey showed on Thursday, failing to meet the expectations of economists who thought it would hold at October's 46.0. It has been rooted below the 50 mark that divides growth and contraction for 10 months now, and survey compiler Markit said it was too soon to say if this marked the nadir. With more austerity on the way, and a reminder of the festering sovereign debt crisis in this week's failure of lenders to agree more aid for Greece, prospects for next year look ominous.

"The concern about the outlook is getting worse as we move towards the end of the year," said Chris Williamson, chief economist from Markit.

He added that German companies especially have become more pessimistic about the year ahead. "If the domestic economy of Germany, the largest euro zone nation, is weakening, then that bodes ill for the rest of the region, especially as there's little trade picking up outside the region." — AP