Euro zone in deep downturn as China, US show revival
The latest purchasing managers indexes (PMIs), which survey thousands of companies all over the world, at least suggested the global economic slowdown is not getting worse, despite the prolonged downturn in Europe.
The US index, released on Wednesday because of the Thanksgiving holiday, showed manufacturing growing at its quickest pace in five months.
China’s vast manufacturing sector, meanwhile, expanded for the first time in 13 months.
Still, Europe looks set to remain the major drag on the world economy next year. It re-entered recession in the third quarter, and this quarter seems unlikely to bring any respite.
While factory data in the euro zone also surpassed expectations, there was a worrying decline in its services sector, comprising the banks, hotels and restaurants that make up most of its economy.
PMI compiler Markit said the surveys were consistent with the euro zone economy shrinking 0.5% this quarter, which would be the worst reading since the first quarter of 2009, when the economy hit its lowest ebb during the financial crisis.
“Looking ahead, we still think... the improvement in the global economy, as signaled by the further pickup in the Chinese PMI, will provide some respite to the euro zone economy,” said Martin van Vliet, economist from ING.
But that could be some way off. The weak PMI outturn for November is a major disappointment in
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