Markit's monthly healthcheck of the eurozone found that the total activity across the region was flat month-on-month at 51.1, above the 50-point mark that separates expansion from contraction. But French manufacturing output dropped to 49.3, its first contraction since July 2009. The overall eurozone manufacturing sector came in at 49.7. Germany's manufacturing sector, the powerhouse of Europe, increased its output to 52, but this was marred by a drop in service activity to just 50.4. Williamson said that the eurozone economy had suffered from a drop in global demand, which dampened demand for exports. The ongoing euro debt crisis has also hit business confidence. Seperate data from Germany underlined how the financial crisis has hit sentiment. The ZEW index, which tracks invester confidence, fell sharply this month. Economists said the size of the drop was surprising, and matched the plunge seen after the collapse of Lehman Brothers. The ZEW economic expectations index dropped to -37.6 from a reading of -15.1 in July. "The skepticism with regard to future economic growth shown by a growing number of financial market experts during the previous months has increased dramatically," said Wolfgang Franz, president of the Mannheim-based Center for European Economic Research, or ZEW.
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Tuesday, August 23, 2011
Markit's monthly healthcheck of the eurozone found that the total activity across the region was flat month-on-month at 51.1, above the 50-point mark that separates expansion from contraction. But French manufacturing output dropped to 49.3, its first contraction since July 2009. The overall eurozone manufacturing sector came in at 49.7. Germany's manufacturing sector, the powerhouse of Europe, increased its output to 52, but this was marred by a drop in service activity to just 50.4. Williamson said that the eurozone economy had suffered from a drop in global demand, which dampened demand for exports. The ongoing euro debt crisis has also hit business confidence. Seperate data from Germany underlined how the financial crisis has hit sentiment. The ZEW index, which tracks invester confidence, fell sharply this month. Economists said the size of the drop was surprising, and matched the plunge seen after the collapse of Lehman Brothers. The ZEW economic expectations index dropped to -37.6 from a reading of -15.1 in July. "The skepticism with regard to future economic growth shown by a growing number of financial market experts during the previous months has increased dramatically," said Wolfgang Franz, president of the Mannheim-based Center for European Economic Research, or ZEW.
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The PMI for the manufacturing sector slid to 49.7 - its first sub-50 reading since September 2009 - although economists had predicted a marginally steeper fall to 49.5.
Output in the sector held steady, with the index at 50.0, down from July's 50.2 and its lowest since July 2009.
"Manufacturing is struggling but that has been joined by a weakening of services sector growth. The outlook for the service sector has also fallen sharply," Mr Williamson said.
The eurozone composite PMI, a broader measure of the private sector which combines the services and manufacturing data, held steady at 51.1, beating forecasts for a fall to 50.1.
The composite index is often used as a guide to growth and Markit said it was consistent with no quarterly growth in the current quarter. Economists polled by Reuters earlier this month predicted growth of 0.3 percent this quarter.
Earlier data from Germany, Europe's largest economy, showed its manufacturing sector grew faster than expected but growth in its service sector nearly ground to a halt.
In France the service sector unexpectedly picked up pace but factory activity declined for the first time in over two years.
The grim numbers come on top of fears that the United States, the world's largest economy, will slide back into recession and after earlier flash data showed activity in China's manufacturing sector shrank in August for a second month running.
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