Confirmed EuroZone in Recession

The Big Q: has the EuroZone has slipped back into recession?

The Big A: Yes. Data from Markit show that EuroZone business activity contracted in February. The Composite Outlook Index, Services PMI Activity Index and EuroZone Manufacturing PMI came in at 49.4, 49.7, and 49, all below the critical 50 level. That marks the difference between growth and contraction.

A retreat below the 50.0 no-change level for the EuroZone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession.

Although business conditions are showing signs of stabilizing this year, representing a marked improvement on the widespread deepening gloom seen late last year, the EuroZone is not on a clear path to recovery. Demand must improve in the coming months before it can safely said that the region will return to reasonable growth.

A great deal of evidence shows that the economic situation in the region will not improve soon. Italy, Spain, Portugal and Greece are admittedly in recessions, and by some measures so is Germany.

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Unemployment is at historic highs in many nations, above 20% in Spain and Greece. Demand within the region will not pick up.

The economically weakest nations are not good markets for exports from stronger economies like Germany's. That leaves demand from outside the region as the key to any GDP expansion within it.

The EuroZone economic indicators were troubling for February, and that will not get better anytimesoon.

Paul A. Ebeling, Jnr. Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.