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Saturday, April 02, 2005 5:33:43 PM
Manufacturing data add to eurozone gloom
Manufacturing data add to eurozone gloom
By Ralph Atkins in Frankfurt
Published: April 1 2005 13:39 / Last updated: April 1 2005 13:39
Eurozone manufacturing growth has slowed to near stagnation, adding to fears that the region's economic recovery has been thrown into reverse.
Output growth tumbled in March back to levels seen last November, with particularly marked declines in France, Germany and Spain, according to the closely-watched purchasing managers' indices compiled by NTC Research. The index for Italy dropped below 50, indicating contraction.
The overall eurozone PMI stood at a four-month low of 50.4, compared with 51.9 in February, almost certainly reflecting the combined effect of higher oil prices and the euro's strength against the dollar.
Jonathan Hoffman, economist at the Royal Bank of Scotland, said the tide of downbeat eurozone sentiment indicators had "turned into a flood".
Robert Prior, at HSBC, added: "In our view, the softness in eurozone gross domestic product (GDP) during the second half of last year was not a soft-spot but the end of the recovery and the start of a sustained slowdown".
Although GDP figures for the first quarter are expected to show a rebound after an exceptionally weak end to 2004, many economists now expect a further slowdown in the second quarter. The PMI data follow the declines in economic sentiment across Europe shown in a European Commission survey earlier this week.
The latest economic news has further reinforced expectations that the European Central Bank will next week leave its main interest rate unchanged at 2.0 per cent next for the 22nd month running. The ECB has described the weak second half of 2004 as "transitory" but may be forced to revise that view. Some economists now predict that the ECB will be forced to leave rates unchanged until well into 2006.
The PMI is based on information provided by 3,000 manufacturers across the eurozone. It reflects hard data on changes in activity levels rather than business sentiment or expectations.
LINK: http://news.ft.com/cms/s/bd657964-a2a9-11d9-b4e8-00000e2511c8.html
Manufacturing data add to eurozone gloom
By Ralph Atkins in Frankfurt
Published: April 1 2005 13:39 / Last updated: April 1 2005 13:39
Eurozone manufacturing growth has slowed to near stagnation, adding to fears that the region's economic recovery has been thrown into reverse.
Output growth tumbled in March back to levels seen last November, with particularly marked declines in France, Germany and Spain, according to the closely-watched purchasing managers' indices compiled by NTC Research. The index for Italy dropped below 50, indicating contraction.
The overall eurozone PMI stood at a four-month low of 50.4, compared with 51.9 in February, almost certainly reflecting the combined effect of higher oil prices and the euro's strength against the dollar.
Jonathan Hoffman, economist at the Royal Bank of Scotland, said the tide of downbeat eurozone sentiment indicators had "turned into a flood".
Robert Prior, at HSBC, added: "In our view, the softness in eurozone gross domestic product (GDP) during the second half of last year was not a soft-spot but the end of the recovery and the start of a sustained slowdown".
Although GDP figures for the first quarter are expected to show a rebound after an exceptionally weak end to 2004, many economists now expect a further slowdown in the second quarter. The PMI data follow the declines in economic sentiment across Europe shown in a European Commission survey earlier this week.
The latest economic news has further reinforced expectations that the European Central Bank will next week leave its main interest rate unchanged at 2.0 per cent next for the 22nd month running. The ECB has described the weak second half of 2004 as "transitory" but may be forced to revise that view. Some economists now predict that the ECB will be forced to leave rates unchanged until well into 2006.
The PMI is based on information provided by 3,000 manufacturers across the eurozone. It reflects hard data on changes in activity levels rather than business sentiment or expectations.
LINK: http://news.ft.com/cms/s/bd657964-a2a9-11d9-b4e8-00000e2511c8.html
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