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Eurozone Woes Could Be Contaminating US And Chinese Economies As World Markets Slide

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Worrying signs that eurozone woes are contaminating powerhouse economies in the United States and China triggered another slide on world markets today.

The weakest US jobs growth in a year, and figures showing expansion in China's manufacturing sector almost ground to a halt last month, dashed hopes that the world's two largest economies will ride out the euro storm.

And further evidence that the crisis is derailing the UK economy was delivered in dire manufacturing figures showing the second sharpest fall in activity in the 20 years of the Markit/CIPS survey.

eurozone unemployment

The eurozone crisis could affect America and China's economies

Markit said the collapse to a three-year low reflected the increasing weakness of the UK domestic market, with overall order books shrinking at a faster rate than export orders.

There was a similar weak performance from European manufacturers, while unemployment across the 17 countries that use the euro remained at 11% in April - the highest level since the single currency was introduced in 1999.

The wave of grim data knocked more than 1% off London's leading shares index, which endured its worst month in three years in May.

The Dow Jones Industrial Average was off 1.5% following the latest jobs figures, while declines were even heavier on markets in Germany and France, with the Dax down 3% and the CAC 40 off 2%.

Employers in America created the fewest jobs in a year in May 2012, 69,000, as the country's unemployment rate ticked up.

"Business sentiment has turned sour," Ellen Zentner, an economist at Nomura Securities told AP. "Companies are concerned about contagion from Europe."

Jason Conibear, a director at forex specialists Cambridge Mercantile, said: "A few months ago the feeling was that a strong China and resurgent US would steer the eurozone through its current plight.

"Now the fear is that these economies could themselves be sucked into the rapidly spiralling eurozone vortex.

"The global economy is in a seriously bad way and we're running out of options to turn things around."

It comes as the British Chamber of Commerce urged the government to introduce growth-creating measures such as increased infrastructure spending. Its director general John Longworth said the country needs growth "and we need it now."

"If the government works together with the private sector to create the right environment over the long term, we'll be able to prove once and for all that bold businesses can propel us forward out of stagnation and firmly on the road to recovery."

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