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European manufacturing falters

Thursday, September 01, 2011 - 01:48

Sept. 1 - Concerns about the health of the global economy persist, with the latest data showing manufacturing activity contracting in the euro zone and Britain. Kirsty Basset reports.

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Germany has been leading the economic recovery in Europe but it seems even there the picture is getting gloomier. Manufacturing has slowed in the euro zone - including Germany - for the first time in around two years, largely thanks to a slump in output and new orders. The Markit Purchasing Manager's Index also fell for the fourth month in a row, to 50.9 from 52 in July. Chris Williamson is Markit's chief economist. (SOUNDBITE)(English) CHRIS WILLIAMSON, CHIEF ECONOMIST - MARKIT "A huge drop, and almost unprecedented. During the height of the financial crisis we saw bigger falls but this is a really big drop in momentum and what we're also seeing, particularly worrying, is that index is being held above fifty largely by employment growth whereas new orders, the leading indicator, they're falling, they're falling at quite a steep pace." Manufacturing also contracted in France, Italy and Spain. The euro fell across the board following the results. And in a further sign that Britain's economic recovery is stalling, UK manufacturing shrank at its fastest rate in over two years last month due to a drop in demand for exports, with the Markit index falling to 49. It's the second month below the 50 line - which signals contraction, rather than expansion. The data has increased expectation that the Bank of England will leave interest rates at their record low of half a percent when it meets next week. Analysts must now decide whether the broader global economic slowdown is temporary, or whether it's heading towards recession. Kirsty Basset, Reuters.

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European manufacturing falters

Thursday, September 01, 2011 - 01:48