London, July 2 (BridgeNews) - Business activity in the euro zone's manufacturing sector contracted in June for the 14th straight month, according to Purchasing Managers figures. Business activity fell to 47.9, in line with forecasts, from a revised 48.5 in May according to traders with access to the latest survey. The reading for the headline index dropped to the lowest level since December 1998.
An index reading below 50 signals a contraction in output, while a reading above denotes expansion. Euro-zone manufacturing data has remained below the key 50 level since it first fell below in April. New orders fell again in June, dropping to 46.6 from a revised 47.2 in May, continuing their recent trend. Output fell to 48.8 from a revised 49.4, while employment within the sector fell to 49.6 from a revised 50.6 in May, the first time the index fell below 50 since May 1999. The prices index also continued to fall. In June it was measured as 51.2, compared to a 51.5 reading in May.
"The report is basically in line, although German data was weaker and French and Italian numbers slightly stronger, and is basically consistent with a weakening outlook for the economy over the coming months," said Lorenzo Codogno, chief euro-zone economist at Bank of America. "This requires limited monetary easing, however, the ECB faces a dilemma and it is likely to worry about the price outlook, with this limiting the scope for cuts."