Euro zone manufacturing shrank at a faster pace in April as output and new orders fell despite the swift toppling of President Saddam Hussein, a survey of 2,500 companies showed today.
The Reuters survey of euro zone purchasing managers was taken between April 14th and 25th, after US forces took Baghdad on April 9th, and shows demand has yet to receive a boost from an end to war uncertainties and lower oil prices.
The Purchasing Managers' Index (PMI) slipped further below the 50 line that divides growth from contraction to 47.8 in April from 48.4 in March. It was the lowest reading since January 2002 and below the 48.5 consensus forecast.
The output index, down at 49.4 in April from 50.4, showed the first shrinkage since September last year and the new orders index, at 47.2 in April from 47.7 in March, was the lowest since January 2002.
"Sales both within Europe and to the rest of the world were reported to have remained sluggish despite the end to the war in Iraq," said NTC Research, which compiles the survey.
Euro zone companies said the euro's surge to about $1.11, more than 25 per cent above the levels of January 2002, had priced them out of foreign markets and compounded the problems of weak demand at home.