Eurozone economy 'in dire straits'May 24, 2012: 10:40 AM ET
As if Europe needed more bad news, a report Thursday showed a big drop in manufacturing activity across the eurozone.
The Markit eurozone PMI composite output index, more commonly known as a survey of purchasing managers, fell to 45.9 in May, according to the preliminary reading. That's down from 46.7 in April and marks a nearly 3-year low.
Any reading below 50 is a sign the manufacturing sector is shrinking, and economists say the weaker-than-expected PMI figure bodes ill for second-quarter gross domestic product in the troubled currency zone.
GDP, the broadest measure of economic activity, was essentially unchanged in the first quarter, meaning the economy didn't grow at all. That was still considered a mildly positive outcome, since many forecasters had expected the economy to have tumbled into recession in the first quarter.
Thursday's report is a stark reminder that all is not well in the euro area, which is also grappling with a potentially devastating sovereign debt crisis.
"All in all, today's dismal PMI figures clearly indicate that the eurozone economy remains in dire straits," said Martin van Vliet, an economist at ING.