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The Eurozone’s continuing economic slowdown indicates that the continent may enter a recession by the end of the year, according to Bloomberg, citing experts and private-sector activity surveys.
According to S&P Global, the region’s purchasing managers’ index (PMI) fell to 47.1 points in November, the sixth straight monthly reading below 50 dividing contraction from expansion. Manufacturing and services both followed the same pattern.
“The Eurozone economy is stuck in mud,” Hamburg Commercial Bank chief economist Cyrus de la Rubia told Reuters. Everything points to “a second consecutive quarter of shrinking GDP” after a 0.1% reduction in gross domestic product in the previous quarter, according to the expert.
The situation is especially dire in the Eurozone’s two largest economies, Germany and France, de la Rubia said, noting that both are “in the grip of considerable weakness.” While Germany’s contraction somewhat eased in November and private-sector activity shrank at a slower pace than in the previous month, the country remains “in recession territory” and its economy may return to growth no sooner than next year, the analyst predicted.
The state of affairs in France, meanwhile, was even worse, with the country’s PMI little changed at 44.5. Both manufacturing and services are suffering from weak demand, while the surge in unused business capacity triggered the first decline in private-sector employment in three years. This put the country’s economy “in a kind of a dead-end,” according to another economist at Hamburg Commercial Bank, Norman Liebke.
According to de la Rubia, inflation in both France and Germany has remained much over target levels and is unlikely to fall significantly to quit impacting on their economies in the immediate future.