After Greece, Europe Sits on Brink of Recession
The euro zone economy is in danger of tipping into recession, with the services sector shrinking this month along with manufacturing, tempering a wave of optimism after a new bailout deal for Greece struck this week.
Surveys of purchasing managers published on Wednesday showed unexpectedly weak activity in the region’s most powerful economy, Germany, and in France.
This is as well as in the bloc’s floundering debtor states, such as Spain, where unemployment is running at 23 per cent, and Greece where the euro debt crisis began more than two years ago and continuous cuts have provoked riots.
The Markit Eurozone Composite Flash PMI, a good leading indicator of overall economic growth, fell to 49.7 in February from 50.4 last month, below expectations for a rise to 50.6 and under the 50 line that divides growth from contraction.
That weakness was echoed in China, whose PMI showed export orders falling in their worst performance in eight months. Europe is China’s biggest export market.
Older data published on Wednesday, official figures on euro zone industrial orders for December, showed there had been some stabilization at low levels. Manufacturing orders in the 17 countries that share the euro rose 1.9 per cent on the month, beating the 0.7 per cent predicted in a Reuters poll and reversing a 1.1 per cent fall in November.
But with euro crisis curtailing on British business with the bloc, two Bank of England policymakers voted earlier this month for an even bigger stimulus to the economy in February than the extra 50 billion pounds ($79 US billion)that their colleagues agreed to pump into the economy, minutes to the BoE’s February 8-9 meeting showed on Wednesday.