Manufacturing woes part 3–Europe

The German Markit/BME manufacturing PMI fell for the fourth month in a row in July, at its fastest pace since April 2009, to its lowest level since June 2009.  

Interestingly July represented the 13 month of falling new business, the longest stretch of declines since the survey began in 1996.

Manufacturing orders, whether you look at the X-12 ARIMA or the BV4.1 data adjustments (shown, given its longer term data profile), is showing a sharp deceleration as of June 2012 (latest data).


As has industrial production:


German manufacturing is a much more important component of GDP growth than it is in other global economies:


A weakening in global demand for its exports is a concern for an economy that stands at the heart of Europe:


The UK Markit/CIPS Manufacturing PMI stood at a 38 month low in July: export business declined at the fastest pace since February 2009.

Likewise the French PMI figures hit a 38 month low, with again the pace of declines on a par with the dark days of the first half of 2009.  The Eurozone PMI fell to a 37 month low of 44.   

Manufacturing woes are also coinciding with weakness in the service sector: “The Markit Eurozone Services Business Activity Index rose to a four-month high of 47.9 in July, above the earlier flash estimate of 47.6. The index nonetheless remained at a level consistent with a sixth straight month of contraction and a steep rate of decline by the historical standards of the survey.”

Of note, is the increasing impact of the crisis and economic downturn on the stronger European economies – in 2011 71% of German exports were made to European economies.   In the first quarter Europe registered 0% growth.  With the increasing deterioration in the second quarter, growth may be negative in the second quarter.  And, given that we may not have scaled the depths of this crisis (central banks and governments are taking on yet more liabilities as growth slows/declines) we may not yet have reached the apogee of the crisis. 

Europe’s place in world export/import markets is too important for current events not to be exacting a toll on foreign manufacturers.   

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