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Manufacturing dips pile pressure on ECB

Tuesday, March 01, 2016 - 01:38

Manufacturing activity across much of Asia shrank in February and growth waned throughout Europe. As David Pollard reports, it's dealt a further blow to policymakers who are struggling to stimulate their economies and spur inflation.

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If China's authorities have a reputation for ruling with a rod of iron, they may be manufacturing rather less of them from now on. More factories like this one near Beijing destined for closure. Millions of workers now facing redundancy in coal and steel and other sectors as the government cuts capacity. But if that's harsh, so are China's latest numbers. Its manufacturing PMI slipped even further below the 50 level that denotes growth in February. Bad news, says Citi European economist Christian Schulz - and not just for China. (SOUNDBITE) (English) CITI EUROPEAN ECONOMIST, CHRISTIAN SCHULZ, SAYING: "Overall, we expect the economy to continue slowing down ... If there is a Chinese hard landing - and the risk is clearly there - the impact would grow and would potentially drag the global economy into recession." Cue Europe's latest PMIs - they add to a run of woeful data for the ECB. Manufacturing is above the key 50 level - but at its lowest for over a year. And the prices reading slumped again. That just a day after euro zone inflation was confirmed at minus 0.2 per cent. All eyes then on Mario Draghi and his ECB colleagues as next week's crucial policy decision gets nearer. (SOUNDBITE) (English) CITI EUROPEAN ECONOMIST, CHRISTIAN SCHULZ, SAYING: "We additional expect them to deliver additional sizeable stimulus ... But whether that will impress markets enough to deliver the positive reaction in markets and beyond which we kind of need at the moment - that is another question." Share markets already taking it as a boost though. German, French and UK indices were all up - as they place their bets firmly on a new round of policy easing. The euro going the other way - down to near three-year low against the yen on these latest figures.

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Manufacturing dips pile pressure on ECB

Tuesday, March 01, 2016 - 01:38