The preliminary Eurozone purchasing managers' indices (PMIs) showed that the downturn in the region steepened during the month of February.

While admitting that today's data was worse than expected survey compiler Markit still expects to see an improvement for the first quarter of 2013 as a whole when compared to the last quarter of 2012.

The Eurozone composite PMI index fell to 47.3 points from January's reading of 48.6, while the consensus had expected to find an improvement to 49.0 points.

The Eurozone-wide manufacturing PMI fell slightly, to 47.8 from the prior month's level of 47.9 and below forecasts for a reading of 48.5. Meanwhile, the services-sector index also fell unexpectedly, to 47.3, from the previous month's level of 48.6, far worse than the 49.0 estimated.

"The decline signals a steepening of the economic downturn, which contrasts with the easing trend seen in the previous three months," Markit said in its report.

Part of the explanation for this weakness comes from the fact that the Eurozone's two major economies saw activity decline - both Germany and France saw an unexpected slowdown in activity.

"A steepening rate of decline in February is a disappointment, and suggests that the Eurozone is on course to contract for a fourth consecutive quarter in the first three months of the year," said Markit chief economist Chris Williamson.

"However, despite the fall in the PMI, the first quarter decline in the economy should be less severe than the 0.6% drop in gross domestic product (GDP) seen in the final quarter of 2012, with a contraction of 0.2-0.3% looking likely."

He added that the data shows "increasing schisms" within the Eurozone, with national divergences between France and Germany having widened so far this year to the worst seen since the survey began in 1998.

"Germany is on course to grow in the first quarter, recovering from the 0.6% GDP fall seen in the fourth quarter, possibly expanding by as much as 0.4%. In contrast, France's downturn is likely to deepen, bringing the euro area's second-largest member more in line with the periphery than with the now solitary-looking German 'core'," Williamson concluded.

JM

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