Growth for Ireland but eurozone falls behind
Published 03/11/2011 | 05:00
IRELAND beat the competition to emerge as the only eurozone economy recording economic growth in October, according to new economic data.
It could prove a hollow victory though as the same figures reveal that the eurozone is now on the brink of recession.
The latest eurozone Purchasing Managers' Index (PMI) for manufacturing fell to 47.1 last month, from 48.5 in September.
The index is a measure of economic activity, any number under 50 means activity is declining. The figure for Ireland was 50.1, which means there was modest growth.
The October data is the clearest evidence yet that political uncertainty is feeding back negatively into the real economy.
October was the third consecutive month where a fall in output was recorded.
"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.
In fact the latest data shows factory output and new orders back at 2009 levels.
Italy suffered the biggest one-month fall since 1997 and data there suggests the Italian economy is deep in recession. It will do nothing to restore confidence in the country's ability to borrow in the markets.
"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."
In Germany manufacturing has slowed for the first time in just over two years.
Separate data shows that German unemployment increased unexpectedly to hit 7pc for the first time since 2009.
There was some good news, however.
Analysts think the weaker economy means interest rate cuts are on the cards. That case was helped by evidence of slowing inflation in core European economies, where costs for manufacturers fell for the first time in two years. (Additional reporting Reuters)