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| Eurozone crisis live: Deeper recession looms as service sector shrinks | Eurozone crisis live: Deeper recession looms as service sector shrinks |
| (40 minutes later) | |
| 10.54am: In Greece, list of electoral candidates are pinned up on boards so people can finalise their choice ready for Sunday. | |
| With so many parties in contention this takes quite a lot of space. Looks like one need to be pretty tall to get a good view of the names at the top of the sheet. | |
| Looks more like a railway timetable. | |
| 10.20am: The latest polling from France suggests that Nicolas Sarkozy is about to be ejected from the Palais de l'Élysée. | 10.20am: The latest polling from France suggests that Nicolas Sarkozy is about to be ejected from the Palais de l'Élysée. |
| Two polls published this morning put François Hollande ahead by 53.5% to 46.5%. A third was closer, at 52.5% to 47.5%. | Two polls published this morning put François Hollande ahead by 53.5% to 46.5%. A third was closer, at 52.5% to 47.5%. |
| Some expects think it will be closer than that. Professor Dominique Reynié, director of the influential Paris-based thinktank Fondapol, believes Hollande will only win by a whisker. | Some expects think it will be closer than that. Professor Dominique Reynié, director of the influential Paris-based thinktank Fondapol, believes Hollande will only win by a whisker. |
| But what would a Hollande presidency mean? Despite Sarkozy labelling his rival as a dangerous fiscal extremist who would plunge Europe back into a deep crisis, most City analysts have a more sober view. | |
| Elisabeth Afseth of Investec is encouraged by the prospect of Hollande stirring things up in Brussels: | Elisabeth Afseth of Investec is encouraged by the prospect of Hollande stirring things up in Brussels: |
| Recent economic data has given some indication of how severe the downturn coming in the wake of the fiscal contraction can be. Fiscal consolidation of course has to happen, and there is no 'painless' way out of current problems, but the risk is that the strict focus on austerity does not address the underlying problem | Recent economic data has given some indication of how severe the downturn coming in the wake of the fiscal contraction can be. Fiscal consolidation of course has to happen, and there is no 'painless' way out of current problems, but the risk is that the strict focus on austerity does not address the underlying problem |
| Nicholas Spiro of Spiro Sovereign Strategy reckons Hollande has limited room for manoeuvre, but will make the most of it: | Nicholas Spiro of Spiro Sovereign Strategy reckons Hollande has limited room for manoeuvre, but will make the most of it: |
| He is likely to test the resilience of France's creditworthiness on the grounds that it is strong enough to accommodate more stimulative policies. France's Socialists are even more distrustful of financial markets. Rather than feeling that they must earn the markets' trust, the Socialists are more likely to take the view that France's bond market can withstand more socially oriented policies. Mr Hollande's economic advisers appear to be suggesting that "if the markets were really worried about France, our yields would be much higher by now." This smacks of complacency in our view. Hollandisme will be a far cry from the "let-it-rip socialism" of the early Mitterrand era, yet it is likely to give the markets reasons to be more nervous about French debt. | He is likely to test the resilience of France's creditworthiness on the grounds that it is strong enough to accommodate more stimulative policies. France's Socialists are even more distrustful of financial markets. Rather than feeling that they must earn the markets' trust, the Socialists are more likely to take the view that France's bond market can withstand more socially oriented policies. Mr Hollande's economic advisers appear to be suggesting that "if the markets were really worried about France, our yields would be much higher by now." This smacks of complacency in our view. Hollandisme will be a far cry from the "let-it-rip socialism" of the early Mitterrand era, yet it is likely to give the markets reasons to be more nervous about French debt. |
| Mujtaba Rahman of Eurasia Group argues that Hollande will struggle to make major changes to Europe's strategy | Mujtaba Rahman of Eurasia Group argues that Hollande will struggle to make major changes to Europe's strategy |
| It's going to be easy for Merkel to sign up to Hollande's growth agenda because it means very little in terms of actual substance...However, on the fiscal side, much of Merkel's agenda is now codified in EU legislation. | It's going to be easy for Merkel to sign up to Hollande's growth agenda because it means very little in terms of actual substance...However, on the fiscal side, much of Merkel's agenda is now codified in EU legislation. |
| 10.05am: Some good economic news – eurozone retail sales rose in March, a better result than expected. | 10.05am: Some good economic news – eurozone retail sales rose in March, a better result than expected. |
| The volume of retail trade across the euro area rose by 0.3%, compared with February. That still leaves it 0.2% lower than the previous year. | The volume of retail trade across the euro area rose by 0.3%, compared with February. That still leaves it 0.2% lower than the previous year. |
| But the data, from Eurostat, also shows that consumers in Europe's weaker countries cut back sharply. Retail sales were down by 2.2% in Portugal, or 5.0% on a year-on-year basis. | But the data, from Eurostat, also shows that consumers in Europe's weaker countries cut back sharply. Retail sales were down by 2.2% in Portugal, or 5.0% on a year-on-year basis. |
| Full details (pdf). | Full details (pdf). |
| 9.34am: Here's some reaction to today's poor service sector data, from Howard Archer of IHS Global Insight. | 9.34am: Here's some reaction to today's poor service sector data, from Howard Archer of IHS Global Insight. |
| The Eurozone service sector purchasing managers' surveys are truly dire....there is a growing risk that the rate of Eurozone contraction could actually deepen in the second quarter. | The Eurozone service sector purchasing managers' surveys are truly dire....there is a growing risk that the rate of Eurozone contraction could actually deepen in the second quarter. |
| The Eurozone is currently being buffeted by major headwinds, notably including increased fiscal tightening in many countries, high and rising unemployment, and elevated oil prices which are keeping up consumer price inflation and squeezing companies' margins. | The Eurozone is currently being buffeted by major headwinds, notably including increased fiscal tightening in many countries, high and rising unemployment, and elevated oil prices which are keeping up consumer price inflation and squeezing companies' margins. |
| 9.14am: This graph shows how Europe's service sector has deteriorated in the last couple of months, (leading to this morning's poor data, see 9.05am) | 9.14am: This graph shows how Europe's service sector has deteriorated in the last couple of months, (leading to this morning's poor data, see 9.05am) |
| It also shows the service sector PMI (the blue line) is a good leading indicator for GDP (the orange line). | It also shows the service sector PMI (the blue line) is a good leading indicator for GDP (the orange line). |
| Chris Williamson of Markit believes today's data shows the eurozone will continue shrinking in the second quarter of 2012, having begun contracting in the last three months of 2011. | Chris Williamson of Markit believes today's data shows the eurozone will continue shrinking in the second quarter of 2012, having begun contracting in the last three months of 2011. |
| 9.05am: Brace yourselves for a deeper, longer recession in the eurozone. | 9.05am: Brace yourselves for a deeper, longer recession in the eurozone. |
| The eurozone service sector has shrunk much faster than expected last month (as implied by the mostly grim data we've seen in the last hour). The final eurozone PMI, just released, came in at 46.9, indicating a sharp downturn in April compared with March (when the PMI was recorded at 49.1). | The eurozone service sector has shrunk much faster than expected last month (as implied by the mostly grim data we've seen in the last hour). The final eurozone PMI, just released, came in at 46.9, indicating a sharp downturn in April compared with March (when the PMI was recorded at 49.1). |
| With any number below 50 indicating a contaction, the message is that the situation in the Eurozone deteriorated in the last few weeks. | With any number below 50 indicating a contaction, the message is that the situation in the Eurozone deteriorated in the last few weeks. |
| Although Ireland and Germany's service sectors still grew, most other countries suffered significant declines. | Although Ireland and Germany's service sectors still grew, most other countries suffered significant declines. |
| Chris Williamson, chief economist at Markit, said business and consumer confidence appears to have deteriorated markedly across the eurozone. He added: | Chris Williamson, chief economist at Markit, said business and consumer confidence appears to have deteriorated markedly across the eurozone. He added: |
| Little can be said to remain of any 'core' of strength in the region. Growth has practically ground to a halt even in Germany, and France has joined Italy and Spain in seeing a strong rate of economic decline. | Little can be said to remain of any 'core' of strength in the region. Growth has practically ground to a halt even in Germany, and France has joined Italy and Spain in seeing a strong rate of economic decline. |
| 8.54am: France's service sector began shrinking in April. Its service sector PMI came in at a six-month low of 45.2 -- after managing a tiny bit of growth in March (when the PMI came in at 50.1). | 8.54am: France's service sector began shrinking in April. Its service sector PMI came in at a six-month low of 45.2 -- after managing a tiny bit of growth in March (when the PMI came in at 50.1). |
| But Germany is doing better -- its service sector kept growing last month, according to Markit, with a PMI of 52.2. That's slightly higher than March (52.1). | But Germany is doing better -- its service sector kept growing last month, according to Markit, with a PMI of 52.2. That's slightly higher than March (52.1). |
| 8.47am: The latest Italian service sector data is as bad as the Spanish (see 8.27am). Activity fell for the 11th month in a row, at its fastest rate for almost three years, down to 42.3 from 44.3 in March. | 8.47am: The latest Italian service sector data is as bad as the Spanish (see 8.27am). Activity fell for the 11th month in a row, at its fastest rate for almost three years, down to 42.3 from 44.3 in March. |
| Markit, which compiles the data, said is shows that the deterioration of the Italian economy accelerated in April. It's already in recession. | Markit, which compiles the data, said is shows that the deterioration of the Italian economy accelerated in April. It's already in recession. |
| 8.39am: One reason there's so much uncertainty over the Greek elections is that opinion polling data has not been published since April 20 (Greece's electoral law doesn't allow it). | 8.39am: One reason there's so much uncertainty over the Greek elections is that opinion polling data has not been published since April 20 (Greece's electoral law doesn't allow it). |
| But the consensus is still that no party will win an overall majority, and that Pasok and New Democracy (the two main parties in the current coalition), might struggle to win enough seats to form a majority between them. Ten different parties could easily win seats in the parliament, many of whom oppose Greece's financial programme. | But the consensus is still that no party will win an overall majority, and that Pasok and New Democracy (the two main parties in the current coalition), might struggle to win enough seats to form a majority between them. Ten different parties could easily win seats in the parliament, many of whom oppose Greece's financial programme. |
| The Wall Street Journal has a good take this morning -- in which it argues that Greece could go to the polls again later this year : | The Wall Street Journal has a good take this morning -- in which it argues that Greece could go to the polls again later this year : |
| Many party officials expect elections by the fall. Some, especially in New Democracy, say fresh elections could happen as early as June. | Many party officials expect elections by the fall. Some, especially in New Democracy, say fresh elections could happen as early as June. |
| New Democracy and Pasok typically dominate Parliament, and take turns governing. But on Sunday they will be lucky to reach a majority of the 300 seats in Parliament between them, thanks to booming support for protest parties, ranging from Marxist-Leninists to neo-Nazis. | New Democracy and Pasok typically dominate Parliament, and take turns governing. But on Sunday they will be lucky to reach a majority of the 300 seats in Parliament between them, thanks to booming support for protest parties, ranging from Marxist-Leninists to neo-Nazis. |
| "We are probably going to wind up with a New Democracy-Pasok coalition if they get the seats, which they might not," says David Lea, an analyst at Control Risks, an independent risk-consulting firm. "Either way, another round of elections before year-end is entirely possible." | "We are probably going to wind up with a New Democracy-Pasok coalition if they get the seats, which they might not," says David Lea, an analyst at Control Risks, an independent risk-consulting firm. "Either way, another round of elections before year-end is entirely possible." |
| Reuters is also warning that the Greek elections are a major risk to the eurozone. | Reuters is also warning that the Greek elections are a major risk to the eurozone. |
| Some economists take the view that Sunday's election could push Greece back to the nadir it touched in November last year, when there was widespread talk of an exit from the euro zone. The contagion effect would drive Spanish and Italian bond yields straight back into the danger zone, economists say. | Some economists take the view that Sunday's election could push Greece back to the nadir it touched in November last year, when there was widespread talk of an exit from the euro zone. The contagion effect would drive Spanish and Italian bond yields straight back into the danger zone, economists say. |
| 8.27am: Spain's service sector has suffered its 10th monthly contraction, according to data just released. | 8.27am: Spain's service sector has suffered its 10th monthly contraction, according to data just released. |
| The Spanish service sector PMI (which measures whether output is rising or falling across a sector) fell to 42.1 in April, from 46.3 in March. That's a large monthly fall, and may show that the Spanish recession is accelerating. Any number below 50 means activity declined. | The Spanish service sector PMI (which measures whether output is rising or falling across a sector) fell to 42.1 in April, from 46.3 in March. That's a large monthly fall, and may show that the Spanish recession is accelerating. Any number below 50 means activity declined. |
| This graph shows how PMI data often tracks GDP. | This graph shows how PMI data often tracks GDP. |
| 8.18am: European big three stock markets are all lower in early trading. | 8.18am: European big three stock markets are all lower in early trading. |
| German DAX: down 40 points, or 0.6%, at 6653 French CAC: down 23 points, or 0.74%, at 3199 FTSE 100: down 9 points, or 0.17%, at 5756 | German DAX: down 40 points, or 0.6%, at 6653 French CAC: down 23 points, or 0.74%, at 3199 FTSE 100: down 9 points, or 0.17%, at 5756 |
| Michael Hewson of CMC Markets reckons traders are also disappointed that the European Central Bank didn't announce any new measures at Thursday's meeting in Barcelona. | Michael Hewson of CMC Markets reckons traders are also disappointed that the European Central Bank didn't announce any new measures at Thursday's meeting in Barcelona. |
| Yesterday's decision by ECB President Mario Draghi that there would be no further help in the near term for the European financial system was a blow to those who thought that in light of this week's disappointing economic data that the ECB would hint at further help if the economic outlook continued to darken. | Yesterday's decision by ECB President Mario Draghi that there would be no further help in the near term for the European financial system was a blow to those who thought that in light of this week's disappointing economic data that the ECB would hint at further help if the economic outlook continued to darken. |
| It would appear that Mr Draghi intends to keep the pressure firmly on European governments to pursue the reformagenda in exchange for any future help, | It would appear that Mr Draghi intends to keep the pressure firmly on European governments to pursue the reformagenda in exchange for any future help, |
| But the Spanish IBEX has actually risen 52 points, or 0.7%, to 6094. | But the Spanish IBEX has actually risen 52 points, or 0.7%, to 6094. |
| 8.11am: Here's a quick agenda (so regular reader Helianthe can make some predictions, like yesterday): | 8.11am: Here's a quick agenda (so regular reader Helianthe can make some predictions, like yesterday): |
| • Italian/French/German service sector PMI for April: from 8.45am BST / 9.45am CEST • Eurozone service sector PMI for April: 9am BST / 10am CEST • Eurozone retail sales for March: 10am BST / 11am CEST • US non-farm payrolls: 1.30pm BST / 8.30am EST | • Italian/French/German service sector PMI for April: from 8.45am BST / 9.45am CEST • Eurozone service sector PMI for April: 9am BST / 10am CEST • Eurozone retail sales for March: 10am BST / 11am CEST • US non-farm payrolls: 1.30pm BST / 8.30am EST |
| The Pasok party is also holding rallies in Athens today - trying to find out the timing (shout if you know!) | The Pasok party is also holding rallies in Athens today - trying to find out the timing (shout if you know!) |
| 8.00am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis. | 8.00am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis. |
| Coming up … pre-election fever is building across Europe, ahead of Sunday's presidential elections in France, and the parliamentary ballot in Greece. The battle between François Hollande and Nicolas Sarkozy is nail-bitingly close, while the Greek vote could deliver a very divided parliament, throwing the country's euro future into confusion. | Coming up … pre-election fever is building across Europe, ahead of Sunday's presidential elections in France, and the parliamentary ballot in Greece. The battle between François Hollande and Nicolas Sarkozy is nail-bitingly close, while the Greek vote could deliver a very divided parliament, throwing the country's euro future into confusion. |
| Financial markets are expected to fall this morning, as traders get edgy about the consequences of both races. | Financial markets are expected to fall this morning, as traders get edgy about the consequences of both races. |
| On the economic front, new eurozone service sector and retail sales figures will be released this morning. And then there's the biggie: the US non-farm payroll - the key measure of American unemployment. | On the economic front, new eurozone service sector and retail sales figures will be released this morning. And then there's the biggie: the US non-farm payroll - the key measure of American unemployment. |