Sunday 17 December 2017

No respite for eurozone economies as output plummets in Germany

Steven Johnson and Jonathan Cable

EUROZONE businesses suffered another dismal month in October as factory output plunged in Germany. Meanwhile, conditions improved slightly for US and Chinese manufacturers.

Financial data firm Markit's composite Purchasing Managers' Index (PMI) for the eurozone, which polls around 5,000 businesses across the 17-nation bloc, fell to 45.8 -- its lowest reading since June 2009. It has now been below the 50 mark -- which separates growth from contraction -- since February.

Germany's Ifo institute reported that business sentiment there dropped sharply to its lowest point in more than two-and-a-half years.

This was the sixth consecutive monthly fall.

By contrast, things were somewhat brighter in North America and Asia. A PMI survey showed China, the world's second-largest economy and a major exporter, slowly recovering from its weakest period of growth in three years.

Growth

The US manufacturing sector managed to grow this month, with Markit's manufacturing PMI index edging up to 51.3.

However, Robert Van Batenburg, head of global research at Louis Capital Markets in New York, warned: "Europe is still struggling a lot and it's the United States' trading partner.

"There are also some concerns about the fiscal cliff and the US presidential election."

The US economy is expected to grow at a sluggish 2pc this year.

Worries about Europe intensified after a survey of manufacturing in Germany, the eurozone's biggest economy, in which the main index plunged by more than expected -- to 45.7 from 47.4.

The rate of decline was even worse in France and illustrated that a slump which began with a debt crisis in Greece has now spread to the eurozone's core economies.

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