Euro-Zone Economy in Retreat

Wall Street Journal
September 23, 2011

Business activity in the euro zone is contracting for the first time in more than two years, according to a closely watched survey, the strongest evidence to date that the global slowdown and Europe's debt crisis are pushing the euro bloc to the brink of recession.

The decline in the purchasing managers index for the euro zone in September contributed to a selloff in global equity markets and the euro.

"My feeling is we are probably headed towards a recession in Europe," says Maria Carrozza, financial director of Pizzorno Environnement SA, a waste-management company with yearly sales of around €200 million ($271 million) that does 80% of its business in France.

The euro-zone PMI for September slid 1.5 points to 49.2, according to data provider Markit, signaling contraction by falling below the 50 mark for the first time since July 2009. The new-orders component of the survey also declined, suggesting further weakness ahead.

A separate report showed euro-zone industrial orders down 2.1% in July from June. Consumer sentiment fell in the currency zone to a two-year low.

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