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Euro zone manufacturing nosedives

Tuesday, July 24, 2012 - 01:31

July 24 - The euro zone's private sector shrinks for a sixth month in July, suggesting a slide back into recession. Ciara Sutton reports.

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Dark times for European manufacturers. A downturn that began in the euro zone's smaller countries is now cutting to the core. Business surveys show Germany's manufacturing sector shrinking at its fastest pace in over three years. And in France, factory activity fell at its fastest since May 2009. The region as a whole is likely to slump back into recession, leaving policymakers battling a raging debt crisis. Chris Williamson is Chief Economist at Markit. (SOUNDBITE) (English) CHIEF ECONOMIST AT MARKIT, CHRIS WILLIAMSON, SAYING: "Some of these leading indicators are still very negative, increasingly negative, suggesting that conditions could worsen further. Manufacturing drove a large part of the bloc's last recovery from recession. But Markit's Manufacturing Purchasing Managers' Index for July fell to 44.1- deep into the sub-50 mark that separates growth from contraction. And it doesn't look like things will get better in the near term. (SOUNDBITE) (English) CHIEF ECONOMIST AT MARKIT, CHRIS WILLIAMSON, SAYING: We've seen it before the periphery was contracting at the fastest rate in 3 years. France came down to join it at that steep rate of decline, and now Germany is coming down as well. So everything is converging in negative territory. Attention will now turn to the European Central Bank. It's already cut interest rates to a record low 0.75 percent. And a poll by Reuters suggests it is likely to introduce further stimulus measures. Ciara Sutton, Reuters.

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Euro zone manufacturing nosedives

Tuesday, July 24, 2012 - 01:31