Surveys hint at euro recession
Source: Agencies |
November 3, 2011, Thursday
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Print Edition
Print Edition
THE downturn in eurozone manufacturing in October was even deeper than previously thought, according to "grim" business surveys yesterday that showed the currency union's debt crisis is dragging its economy back into recession.
The final Markit Eurozone Manufacturing Purchasing Managers Index for October, which gauges changes in activity levels across thousands of eurozone manufacturers, fell to 47. 1, revised down from a preliminary reading of 47.3 and down from 48.5 in September.
This marks the third consecutive month the manufacturing PMI has been below the 50 level that divides contraction from growth. Output and new orders indexes plunged to levels not seen since mid-2009.
The survey suggests the crisis is putting a chokehold on euro area business and, along with news that German unemployment unexpectedly rose for the first time in nearly two years to 7 percent, it adds pressure on the European Central Bank to cut interest rates. "It makes grim reading," said Alan Clarke, economist at Scotia Capital. "If there was any doubt that the eurozone was headed for recession, these data should confirm it."
The survey's factory output measure plunged to 46.6 in October from 49.6.
"Output, new orders and new export orders all suffered their fastest declines since mid-2009, against a backdrop of weak domestic market conditions, the ongoing debt crisis and a darkening outlook for the global economy," said Rob Dobson, senior economist at Markit.
Broken down by country, in Germany, the economic engine of the eurozone economy, manufacturing activity contracted for the first time in just over two years.
Spanish factory activity shrank for a sixth straight month, while conditions in Italy, increasingly the focal point of worry in the still-raging eurozone debt crisis, deteriorated much more sharply than expected to a 28-month low.
Italy's manufacturing PMI fell 5 points to 43.3, the biggest one-month fall since the survey began in 1997, suggesting an economy deep in recession.
For the eurozone as a whole, the new orders index fell for the fifth month running, plummeting to 43.4, the fastest rate of decline since May 2009. As a reliable forward-looking indicator, that bodes poorly for factory activity in November.
The final Markit Eurozone Manufacturing Purchasing Managers Index for October, which gauges changes in activity levels across thousands of eurozone manufacturers, fell to 47. 1, revised down from a preliminary reading of 47.3 and down from 48.5 in September.
This marks the third consecutive month the manufacturing PMI has been below the 50 level that divides contraction from growth. Output and new orders indexes plunged to levels not seen since mid-2009.
The survey suggests the crisis is putting a chokehold on euro area business and, along with news that German unemployment unexpectedly rose for the first time in nearly two years to 7 percent, it adds pressure on the European Central Bank to cut interest rates. "It makes grim reading," said Alan Clarke, economist at Scotia Capital. "If there was any doubt that the eurozone was headed for recession, these data should confirm it."
The survey's factory output measure plunged to 46.6 in October from 49.6.
"Output, new orders and new export orders all suffered their fastest declines since mid-2009, against a backdrop of weak domestic market conditions, the ongoing debt crisis and a darkening outlook for the global economy," said Rob Dobson, senior economist at Markit.
Broken down by country, in Germany, the economic engine of the eurozone economy, manufacturing activity contracted for the first time in just over two years.
Spanish factory activity shrank for a sixth straight month, while conditions in Italy, increasingly the focal point of worry in the still-raging eurozone debt crisis, deteriorated much more sharply than expected to a 28-month low.
Italy's manufacturing PMI fell 5 points to 43.3, the biggest one-month fall since the survey began in 1997, suggesting an economy deep in recession.
For the eurozone as a whole, the new orders index fell for the fifth month running, plummeting to 43.4, the fastest rate of decline since May 2009. As a reliable forward-looking indicator, that bodes poorly for factory activity in November.
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