The eurozone economy is showing the clearest signs yet that the worst of its recession is over, with a closely watched survey yesterday reporting that the pace of decline had decelerated unexpectedly sharply this month.

A surprisingly strong rise in purchasing managers' indices suggested “green shoots” spotted elsewhere in the world were breaking out in the 16-country eurozone – raising the prospect of economic activity stabilising and even returning to growth by the end of the year. However, the latest survey showed companies shedding jobs at an increasing rate.

The eurozone's recession – the worst in continental Europe since the second world war – gained ferocity in the first quarter of the year. Separate data yesterday showed industrial orders in February were down 34.5 per cent compared with the year before – the biggest decline since records began in 1996.