Eurozone PMI points to a recession

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LONDON, Aug. 23 (UPI) -- Research firm Markit Economics said business activity in the 17-member eurozone was nearly unchanged in August as it remained in a prolonged slump.

"The index has now signaled a contraction of the eurozone private sector for seven successive months," Markit said.

A so-called flash estimate of the region's Composite Output Index, an advanced measure with 85 percent of the pertinent data available, came in at 46.6 in August, showing a slightly slower pace of decline than July, when the index was at 46.5.

The breakeven point on the index is 50. Below that point indicates a contraction and the further away from 50 the faster the contraction. Above 50 indicates growth.

For service industries, the Purchasing Managers Index in August was estimated at 47.5, a two-month low following July's reading of 47.9.

The Flash Eurozone Manufacturing PMI in August came to 45.3 after July's 44.6 reading.

The Manufacturing PMI Output Index for the eurozone also showed slower contraction at 44.6 after a July reading of 43.4.

Markit said businesses in the region suffered "a further marked drop in new orders," as new business orders fell for the 13th consecutive month in the 17-member region that shares the euro as currency.

The composite index "reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012," said Senior Economist Rob Dobson at Markit.

"Taken together, the July and August readings would historically be consistent with (the) gross domestic product falling by around 0.5 percent to 0.6 percent quarter-on-quarter," he said.

The figures for September would require a "substantial bounce," to put the GDP into the black during the third quarter, he said.

In the eurozone's largest economy, Germany, the composite output flash estimate came to 47 in August, a 38-month low following a 47.5 reading in July.

Manufacturing in Germany hit a two-month high but remained in contraction with the PMI at 44.6.

In the second-largest eurozone economy, France, the composite output flash estimate reached 48.9, which also signaled contraction, but at the slowest pace in six months.