By Daniel Hunter

The Markit Eurozone PMI Composite Output Index rose from 47.7 in May to 48.9 in June, according to the flash estimate, indicating the smallest downturn in business activity since March last year.

The sub-50 reading nevertheless rounded off another weak quarter. At 47.8, the average reading for the three months to June is only marginally higher than the 47.7 average recorded in the first three months of the year, suggesting that the eurozone’s recession will have dragged into a seventh successive quarter.

Although activity continued to decline overall, the third consecutive monthly rise in the PMI in June indicated that the rate of contraction is on a moderating trend. Manufacturing output fell in June at the slowest rate in the current 16-month sequence, registering only a very modest decline, and services business activity showed the joint- weakest fall since March 2012.

Adding to the picture of the downturn moderating, new business fell at the slowest rate for five months, the rate of decline having eased for the third month in a row. New orders in manufacturing fell only marginally, registering the smallest decline for two years, while the services sector saw the smallest fall for five months.

Strongly divergent trends were again evident within the region, however, especially between the two largest member states. While Germany saw output rise for the second successive month, France suffered another steep contraction, albeit seeing the weakest falls in both output and new orders since August of last year.

Elsewhere across the region output and new orders both fell at the slowest rates for two years, signifying a marked easing in the rate of contraction compared to that seen at the start of the year.

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