High frequency indicators in the past month continue to depict Europe's darkening economic landscape, said Standard & Poor's in its report "European Economic Outlook: Back In Recession," published today.The composite Purchasing Managers Index (PMI) for the eurozone, an indicator of manufacturing trends, fell to 47.2 points in October from 49.9 points a month earlier, the biggest drop since July 2009. At the same time, new orders
in eurozone manufacturing fell for the third month in a row, while export orders lost ground for the fifth consecutive month. The contraction in activity has also spread to services, with the eurozone services PMI in October at its lowest since July 2009.
"Europe's approaching recession first took hold in Spain, Portugal, and Greece, and the economic woes are now spilling over into the eurozone's core of France and Germany," said Standard & Poor's chief economist in Europe
Jean-Michel Six.
We have once again cut our 2012 real GDP growth forecasts for France to 0.5% from 0.8%, Germany to 0.8% from to 1%, and Italy to 0.1% from 0.2%. "We now expect a mild recession in first-half 2012 in the eurozone, ahead of a
modest pick up in the second part of the year," added Mr. Six. "But we stress that the downside risk remains very significant. We estimate that our baseline forecast of a mild recession has a 60% probability, while a more severe
recession has a 40% probability."
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