Euro zone private sector business growth was weaker than forecast this month on slowing new orders in the region, dragged down largely by faltering activity in France, a survey showed on Thursday.

That news comes despite a big fall in the euro that could support exports, as well as the launch in March of a much-awaited sovereign bond buying programme from the European Central Bank.

“The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledgling recovery seen at the start of the year,” said Chris Williamson, chief economist at survey compiler Markit.

Firm conclusions

“However, it’s too early to draw firm conclusions about whether growth is faltering again and (about) the effectiveness of policy.”

Markit’s Composite Flash Purchasing Managers’ Index, based on surveys of thousands of companies and seen as a good growth indicator, fell to 53.5, missing even the lowest forecast in a Reuters poll.

A PMI covering the dominant service industry came in below expectations by falling to 53.7, and the dip in the factory PMI to 51.9 also missed the median forecast. However, they did hold above the 50 mark that separates growth from contraction.

Mr Williamson said the PMI pointed to 0.4 per cent GDP growth in the current quarter, in line with consensus in a Reuters poll on Wednesday.

Spanish unemployment

Data from Spain has also disappointed, with unemployment rising slightly in the first three months of the year, remaining stubbornly high even though the economy is picking up and fewer jobs were lost than in recent first quarters. Prospects for jobs and the economy after a debilitating crisis have become a crucial political battleground ahead of a general election pencilled in for late 2015. The jobless rate, second only to Greece's in Europe, rose to 23.78 per cent in January-March from 23.7 per cent a quarter earlier, according to National Statistics Institute (INE) data.

Reuters