Feb. 21 - Hopes the euro zone might soon emerge from recession were dealt a blow as a survey showed the downturn in the region's businesses unexpectedly worsened this month, especially in France. The gap between core euro zone members, France and Germany, is at its widest since the PMI survey began in 1998, as French services companies are in the middle of a slump. Hayley Platt reports.
A euro zone recovery is looking less likely. It was hoped new business survey data would show small signs of economic improvement. But the latest Markit Euro zone Services PMI numbers showed activity in the region fell in February. The survey fell 1 point to 47.3 - below the crucial 50 mark that indicates growth. But it's a mixed picture across the euro zone - the divide between Germany and France is growing. Rob Dobson is Markit's senior economist. SOUNDBITE: Rob Dobson, senior economist, Markit, saying (English): "In a lot of these countries the domestic market it's still very very weak. Whereas we're seeing some of the growth more in places like Germany where they're having a bit of a boost from export orders and the domestic market not being as weak as elsewhere." The gap between the bloc's two biggest economies is now the widest its been since the survey started 15 years ago. Manufacturing in Germany expanded for the first time in a year, but only barely. But things were far worst in France where its service sector - which covers banks to restaurants - shrank at its fastest rate in nearly four years. That's a big cause for concern, says James Ashley from RBC Capital Markets. SOUNDBITE: James Ashley, RBC Capital Markets, saying (English): "I think it's got relatively strong fundamentals but there's no doubt that there are major structural challenges and cyclically it's in a very weak position. I think when we get the latest commission forecast tomorrow we'll see a significant downgrade and the French government's forecast for growth of .8% this year looks even more optimistic." The survey only brought a little good news. While companies are still cutting jobs across the 17 euro zone nations, the pace of those cuts has slowed.