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‘Meagre’ growth for euro zone factories

Monday, February 02, 2015 - 01:44

Euro zone factory activity grew slightly last month as companies kept slashing prices but, as Sara Hemrajani reports, a weakened currency did little to help drive new orders from abroad.

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An underwhelming start to the year for euro zone manufacturing. While factory activity grew slightly in January, the pace of expansion remained sluggish. The final Purchasing Managers' Index for the region came in at 51, just above the 50 figure that separates growth from contraction. That's even as companies slashed prices and the euro weakened. Simon Smith is chief economist at FxPro. SOUNDBITE: Simon Smith, Chief Economist at FxPro (English): "The simple problem is just getting sustainable growth, that will continue to be an issue and having a monetary policy that is suiting some, i.e. Germany but even they're slowing, but also the others. The periphery which is struggling because of the inability in a monetary union to have an independent monetary policy, inflate your way out or have a devaluation." Even Europe's powerhouse economy Germany saw its manufacturing sector dampened by slower job creation and cooling exports. And France's factory output shrank for a ninth month. Most of the survey's results were collected before the ECB announced its multi-billion euro bond-buying plan. But there's some scepticism as to whether the central bank's 'bazooka' of QE will make much of an impact. SOUNDBITE: Simon Smith, Chief Economist at FxPro (English): "Even though it was larger than expected in terms of its size, but it's coming in late in the day. Bond yields are already low and the whole mechanisms by which it works through government bond markets and also credit markets is very different to what you've seen in the UK and US." No doubt analysts will be paying closer attention to February's numbers to see if QE and lower oil prices are enough to inject a dose of all too elusive growth.

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‘Meagre’ growth for euro zone factories

Monday, February 02, 2015 - 01:44