The Corner

Euro Pain

It’s never a good idea to make too much of one month’s numbers, but today’s euro zone PMI data made very depressing reading indeed. Some extracts (my emphasis added):

The seasonally adjusted Markit Eurozone Manufacturing PMI® fell to a near three-year low of 45.9, down from 47.7 in March and below the earlier flash estimate of 46.0. The headline PMI has signalled contraction in each of the past nine months. The April PMIs also indicated that manufacturing weakness was no longer confined to the region’s geographic periphery. The German PMI fell to a 33-month low, conditions deteriorated sharply again in France and the Netherlands also contracted at a faster rate.

There was no respite for the non-core nations either, with steep and accelerating downturns seen in Italy, Spain and Greece…

. . . Jobs declined slightly in Germany – following a two-year period of growth – and the Netherlands. Accelerating rates of decline were seen in France and Italy, while job losses remained substantial in Spain and Greece.

And it’s worth noting this from Markit’s chief economist:

“. . . With manufacturers typically conducting the majority of their trade within the euro area, austerity in deficit-fighting countries is having an increasing impact on demand across the region. Even German manufacturing output showed a renewed decline, attributed by many firms to weak demand from southern Europe. As such, it is hard to see where growth will come from in coming months, unless export demand picks up strongly from countries outside of the Eurozone. . .”

Rock, meet hard place.

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