April 23 (Bloomberg) -- Euro-area services and factory output shrank for a 15th month in April as the currency bloc struggled to emerge from a recession, adding to pressure on the European Central Bank to do more to boost growth.
A composite index based on a survey of purchasing managers in both industries held at 46.5, London-based Markit Economics said today. That’s in line with the median of 26 economists’ forecasts in a Bloomberg News survey. A reading below 50 indicates contraction. The euro area’s woes were compounded today by concern global growth may falter after a report showed Chinese manufacturing expanding at a slower pace this month.
“Added weakness in activity indicators and continued easing in inflation indicators will raise the pressure on the ECB to provide more stimulus,” said Jonathan Loynes, an economist at Capital Economics Ltd. in London. “What form that will come in -- interest rate cuts, LTROs or even bolder steps - - remains to be seen. The hurdles to the ECB undertaking some form of QE are a lot lower than some people would suggest.”
ECB President Mario Draghi said last week that the economic situation in the 17-nation euro area hadn’t improved since the ECB’s last meeting on April 4. The euro-area economy has contracted for five quarters, and confidence has been shaken by political turmoil in Italy and the bailout of Cyprus. The International Monetary Fund last week lowered its global growth forecast and urged the ECB to pursue an “aggressive” monetary policy.
The euro was trading at $1.2980 at 10:26 a.m. in London, down 0.7 percent on the day.
The ECB predicts the euro-area economy will shrink 0.5 percent this year before growing 1 percent in 2014. Meanwhile the Bundesbank said yesterday that sluggish industrial production and cold winter weather may have delayed Germany’s economic recovery, which it had forecast for the first quarter.
Spain’s recession eased in the first quarter as Prime Minister Mariano Rajoy prepared to foster growth while reducing the country’s budget deficit. Gross domestic product fell 0.5 percent from the fourth quarter, when it dropped 0.8 percent, the Bank of Spain said in its monthly bulletin today.
The U.K. also showed signs of continued economic weakness, as a factory index for April unexpectedly fell to the lowest in 2 1/2 years as export demand weakened, the Confederation of British Industry said in a report today. A gauge of orders dropped to minus 25, the lowest since October 2010.
In China, weakness in global and domestic demand hurt manufacturing, fueling concern that the world’s second-biggest economy is faltering. The preliminary reading of 50.5 for a purchasing managers’ index released by Markit and HSBC Holdings Plc compared with a final 51.6 for March.
The euro-area services index rose to 46.6 in April from 46.4 in March, Markit said today. The manufacturing gauge fell to 46.5 from 46.8.
Although Markit’s composite gauge was unchanged in April, “the survey is signaling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify further in coming months rather than ease,” Chris Williamson, Markit’s chief economist, said in today’s report.
Commerzbank AG, the German bank that got 18.2 billion euros ($23.7 billion) in state aid, on April 19 forecast a first-quarter loss on staff-reduction costs as executives faced disgruntled shareholders in Frankfurt.
Carrefour SA, France’s biggest retailer, on April 18 reported weaker first-quarter sales as cold weather and slow consumption in Europe weighed on demand in the region. Revenue from continuing operations fell 1.3 percent to 20.8 billion euros, the Boulogne-Billancourt, France-based company said.
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