This article talks about a slow down in the German economy last month. It was observed that this economy is near stagnation. The PMI ( Purchasing managers index ) which measures both the manufacturing and services showed that the index fell from 53.3 to 50.6 last month. The french economy also contracted as its rating fell to 41.9. This is the biggest contraction the french economy has seen in four years.
The index for the euro zone as a whole fell from 47.9 to 46.5 . This shows that the euro zone recession is deepening again because business have become worried about the recent political instability and the recent Cyprus debt crisis.
http://www.bbc.co.uk/news/business-22024606
The index for the euro zone as a whole fell from 47.9 to 46.5 . This shows that the euro zone recession is deepening again because business have become worried about the recent political instability and the recent Cyprus debt crisis.
http://www.bbc.co.uk/news/business-22024606
This fall in the PMI indicates not only that the countries are facing a decline in economic production, but also in the general number of new orders (from customers), which also affects supplier deliveries(they coming slower?), inventory and employment level, all contributors to the decline in economic output. The PMI shows if conditions are improving or worsening in an economy and hence are used as a tool for investors to decide if they should increase or decrease their investments. Therefore, this uncertainty could deepen even further the recession Europe is facing.
ReplyDeleteHowever, it should also be noted that Germany is still economically way more stable then rest of the Euro zone
ReplyDeleteA possible cause of this contraction is most likely due to the decrease in consumer spending.
ReplyDeleteThis can all be traced back to the slow growth prospects in Europe and the weak efforts by the ECB to help reach a recovery. Its very hard to offer monetary stimulation to the economy while Germany maintains its notorious fear of inflation.
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