Eurozone: Manufacturing Contraction Continues

February 2nd, 2012
in econ_news

Econintersect:  Euro zone manufacturing activity declined for a sixth straight month in January.  There was a slight uptick in Germany but the declines z-manufacturingelsewhere were larger.  The PMI (Purchasing Managers’ Index – Eurozone) rose significantly in January to 48.8 after registering 46.9 in December.  This was the sixth consecutive month that the PMI has indicated manufacturing is contracting with a value below 50.  Germany broke a string of three contractions in January but all other countries showed contraction continuing.  France and Italy both had the sixth consecutive down month while Spain has had nine contracting months in a row.

Follow up:

New orders showed the eighth consecutive month of contraction at 46.5, up from December’s dismal 43.5 reading.  The New Orders Index is one of the most important forward looking components of the PMI.  Employment in factories showed a slight increase in January but if new orders continue to contract that might be a one month phenomenon.

Fiscal policy is showing no signs of support for manufacturing or the economy in general.  From Yahoo News (Reuters):

On Monday, most European Union states agreed to a German-led pact that will impose quasi-automatic sanctions on countries that breach EU budget deficit limits and will enshrine balanced budget rules in national law. That however will not solve euro zone countries' immediate debt problems.

Unemployment hit a new high in the Eurozone in December at 10.4% unemployed.  However, there are countries where unemployment is much higher (PIIGS - Portugal, Ireland, Italy, Greece and Spain) and particularly among young adults, even those with university training.  See GEI News.


Reuters, Yahoo News found on Econintersect_Europe newspaper page

Financial Systems and Italian Cruise Ship Captains (GEI News, 31 January 2012)

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