UK first-quarter growth revised down: Britain’s economy is in a deeper double-dip recession than first thought after the official output estimate for the first quarter was revised from a contraction of 0.2 per cent to 0.3 per cent.
The Office for National Statistics reduced its second estimate of gross domestic product because construction output fell 4.8 per cent in the first quarter, more than the first estimate. Manufacturing output was flat and the output of the dominant services sector rose an anaemic 0.1 per cent.
Eurozone economy contracts sharply: Eurozone economic activity has contracted this month at the fastest pace for almost three years while German business confidence dropped sharply as the eurozone debt crisis gained significantly in intensity…. Purchasing managers’ indices showed eurozone private sector economic activity contracting in May at the fastest rate since June 2009. The slowdown was particularly sharp in France, but the German index also showed the eurozone’s largest economy had fallen into contraction territory.
Martin van Vliet, economist at ING, said the results “clearly indicate that the eurozone economy remains in dire straits” and “highlight the need for a more expansionary monetary policy, and a less contractionary fiscal thrust in the eurozone”. So far, the eurozone has avoided falling into a technical recession, defined as two quarters of negative growth. Gross domestic product in the first three months of the year was flat, thanks to a strong German performance which compensated for weakness across the rest of the region. But the latest PMI data were consistent with GDP contracting 0.5 per cent in the second quarter, according to Markit, which publishes the survey. An “increasingly steep slowdown” in the crisis-hit eurozone “periphery” countries was infecting both France and Germany, said Chris Williamson, Markit’s chief economist.