LONDON (AP) -- The recession afflicting the 16 nations that use the euro eased further in May, closely watched surveys found Thursday, reinforcing hopes that growth may emerge possibly by the end of the year.
The monthly purchasing managers' surveys for the manufacturing and services sectors -- key gauges of activity -- improved in May to levels last seen before the collapse of U.S. investment bank Lehman Brothers in September, when the global financial crisis took a turn for the worst.
The "flash" estimate for the manufacturing index rose to 40.5 in May from 36.8 in April while the equivalent measure for the services sector increased to 44.7 from 43.8. The composite measure, which combines the two, climbed for the third month running to an eight-month high of 43.9 from 41.1.
The readings continue to point to recession as anything below 50 indicates a contraction. However, they also show that the severity of the recession is easing as the nearer the reading is to 50 the less marked the contraction.
In the first quarter of 2009, the euro zone saw its gross domestic product slump by a massive 2.5 percent, with Germany particularly badly hit by the collapse in global demand for its high-value exports, such as cars and heavy machinery.
"This means that -- despite the improvement -- all we can hope for is a more modest pace of contraction in GDP in the second quarter," said Daniele Antonucci, European economist at Capital Economics.
Antonucci said the current level of the composite PMI is consistent with a quarterly decline of around 0.7 percent in the second quarter, though he noted that the index did underestimate the scale of the contraction in the first quarter.