The eurozone's services sector contracted in March, according to figures this morning, as the threat of war in Iraq and rising unemployment deterred consumers from spending. The eurozone Purchasing Managers' Index for activity at businesses such as banks, restaurants and airlines fell to a 17-month decline in March. It dropped to 47.7 from 48.9 in February, where a reading below 50.0 indicates contraction. The outcome was much lower-than-expected, with economists forecasting a decline to 48.5. The Irish services sector grew in March - though it slowed from the previous month (see earlier story) - while the French services PMI also eased, although it remained above 50, at 50.9 from 53.8 in March.
But the German services sector PMI fell to a six year low in March, dropping to 43.3 from 43.6 in February. News that the German services sector is heading the same way as its manufacturing economy, which also contracted in March, came as the Labour Office reported another rise in unemployment in the eurozone's largest economy. The number of people out of work in Germany increased by 52,000 to 4.61 million in March, the Federal Labour Office said this morning. //www.fxcentre.com