Signs add up to euro zone recession

Euro zone services shrank more than initially estimated in August, adding to signs that the 17-nation economy has slipped into a recession.

A gauge based on a survey of purchasing managers fell to 47.2 from 47.9 in July, Markit Economics said yesterday. That is below an initial estimate of 47.5 published on August 23. A composite index of both services and manufacturing fell to 46.3 from 46.5, also below an initial estimate.

Europe’s economy probably entered its first recession in three years in the second quarter as governments cut spending to plug budget gaps and global growth cooled.

The latest signs of weakness came a day before the governing council of the European Central Bank (ECB) meets in Frankfurt.

“The weakness in activity is likely to be one of the main reasons of concern for the ECB governing council,” said Annalisa Piazza, an analyst at Newedge Group. – Bloomberg