Euro Crisis

Europe's Economy Shrinks More Than Anticipated

The continent isn't pulling out of recession


European services and factory output contracted more than initially estimated in December, adding to signs a recession in the region may extend into this year.

A composite index based on a survey of purchasing managers in both industries was revised down to 47.2 from an initial estimate of 47.3 published on Dec. 14, London-based Markit Economics said in a report today. That compares with 46.5 in November. A reading below 50 indicates contraction.

The euro area is struggling to pull out of its second recession in four years as governments cut spending to combat the sovereign debt crisis and consumers curtail spending. Economists foresee a further drop in gross domestic product in the final three months of 2012 and the European Central Bank forecasts a contraction of 0.3 percent in 2013.