Germany's Minister of Finance Wolfgang Schauble speaks during a discussion on "A Reform Agenda for Europe's Leaders"
Germany's Minister of Finance Wolfgang Schauble speaks during a discussion on "A Reform Agenda for Europe's Leaders" during the World Bank/IMF annual meetings in Washington October 9, 2014. Schaeuble said on Thursday more government spending was a wrong cure for the euro zone's weak growth and dismissed the prospect of recession for Europe's biggest economy. Reuters

Concerns are up on a Eurozone recession after some gloomy economic data came out, that showed poor signs of economic recovery in the EU area. The economic activity in major EU states led by Germany dropped to a 16-month low. Prominent Eurozone economies such as France and Germany recorded renewed pressures of economic weakness with the latter's manufacturing sector showing a slowdown.

Germany's Woes

The Markit survey on Germany, showed German manufacturing companies sending out signals of struggle. Germany's composite purchasing managers' index, indicative of new orders, output and employment fell to 50.0 in November from the 51.4 in October. The Euro Stox 50 index-- a barometer of blue chips for the eurozone, closed at 0.7 percent, reported New York Times.

The survey noted strains in manufacturing and services sectors, having posted the weakest growth since July 2013. The survey on purchasing managers was conducted by Market Economics, a London-based data analysis company. As noted, the composite purchasing managers' index for the eurozone slipped to 51.4 in November. The convention is that when the number plummets below the benchmark of 50, there will be contraction in the economy, and when the number goes up, it suggests an expansion.

The purchasing managers' index is considered as a reliable real-time guide to economic activity. Now the Eurozone's dismal show has added more pressure to the European Central Bank, which has been advising the bloc's leaders for expansionary fiscal policies. In the current scenario, companies are reluctant to invest, governments are cutting public spending and joblessness is soaring at 11.5 percent. So, few expect the demand to come back soon.

Meanwhile, European Central Bank President Mr Mario Draghi indicated the need for drastic action to breathe life into the eurozone economy. Draghi warned that excessively low inflation is harmful and it must be contained immediately. The banker said he was concerned that there was no sign of growth on the horizon and said ECB will be forced to step up its programmes to pump more money into the currency bloc if the ongoing measures fail to impact on the low inflation rates.

Slight Optimism

Some economists are still optmistic on Germany. The German slowdown "is certainly bad news for the rest of the eurozone as Germany has been in stagnation for two quarters in a row," said Carsten Brzeski, an economist at ING in Frankfurt, in a research note. However, Brzeski said it is too early to read too much into the report, as Germany's "strong labour market, lower energy prices, solid private consumption and a recovery of foreign demand can still support its turn around in the last quarter of the year." The eurozone expansion in the quarter that ended Sept 30, was just 0.6 percent. This is insignificant, compared to the growth in the United States' economy, with 3.5 percent growth in the third quarter.

Telegraph reported that the indicators on eurozone's economic health have dashed the hopes for an imminent recovery in the area. This is reflected in the words of Jennifer McKeown, senior European economist at Capital Economics, who described the data as "a serious blow to the recovery that was expected to resume towards the end of the year."