Europe faces long recovery
Europe will take longer to recover from its economic crisis as it tackles a worse-than-expected recession in the eurozone and unemployment at record levels, the European Union warned Friday.
In its spring economic forecast, the EU said that gross domestic product in the 17 member countries that use the euro will shrink by 0.4 percent this year, better than the 0.6 percent contraction in 2012 but 0.1 percentage points worse than the EU had forecast back in February.
The report also had bad news for the wider 27-country EU: it now expects the region’s economy to shrink by 0.1 percent in 2013, against a forecast of 0.1 percent growth in February.
“Grappling with the aftermath of a profound financial and economic crisis, the EU economy is set to pick up speed only very slowly in the course of this year,” the report said.
Service firms’ growth slows
A survey of U.S. service firms says the sector expanded at a slower pace in April than March, as companies reported less business activity and couldn’t raise their prices.
The Institute for Supply Management said Friday that its index of non-manufacturing activity fell to 53.1 in April from 54.4 in March.
Any reading above 50 indicates expansion.
The report measures growth in industries that cover 90 percent of the work force, including retail, construction, health care and financial services.
The decline in the overall index suggests some service companies may be starting to see less consumer demand, in part because of higher Social Security taxes.
Orders to factories down
Orders to U.S. factories fell in March by the largest amount in seven months, but a key category that signals business investment plans increased.
Factory orders dropped 4 percent in March, reflecting a big plunge in the volatile category of commercial aircraft, the Commerce Department reported Friday. Orders had been up 1.9 percent in February.
Orders in a category considered a proxy for business investment plans rose 0.9 percent, a modest gain but an improvement from a preliminary report last week that had shown a decline.