Euro
zone rot spreads to Germany ,
China
(Reuters) - The euro zone's
biggest member Germany is
being sucked into the bloc's worsening economic quagmire, business surveys
suggested on Wednesday, as similar data signalled the slowdown in China
The slump
that began in Greece and spread to other smaller euro zone economies was
clearly gripping the core in October, marking the worst month for the 17-member
bloc since it emerged from recession more than three years ago.Markit's
Composite Purchasing Managers' Index (PMI), which polls around 5,000 businesses
across the 17-nation bloc and is viewed as a reliable growth indicator, fell to
45.8 this month.
That was
the lowest reading since June 2009, confounding consensus expectations in a
Reuters poll for a rise to 46.4. The index has now been below the 50 mark that
separates growth from contraction since February. Similar PMI data for China United States
GERMAN
PLUNGE
The
manufacturing PMI for Germany
- another major exporter and Europe 's economic
powerhouse - plunged to 45.7 from 47.4, also confounding expectations for a
rise and well below even the lowest forecast polled by Reuters. The rate of
decline was even worse in France
"(It)
reinforces concern that the economic downturn in the region may be deepening
and widening," said Martin van Vliet, senior economist at ING. The data
were published just before European Central Bank President Mario Draghi was due
to appear before German lawmakers for a grilling over whether his plans to buy
euro zone sovereign debt might trigger inflation or compromise ECB
independence. They also coincided with the latest numbers from Germany's Ifo
institute showing business sentiment in the country dropped sharply to its
lowest in more than 2-1/2 years, the sixth consecutive monthly fall.
"Any
hopes of a rebound appear to have been dashed for now. Germany is heavily dependent on exports so a
global slowdown is going to impact on Europe 's
growth motor," said Peter Dixon at Commerzbank. Germany
The euro
zone economy contracted 0.2 percent in the second quarter and is predicted to
have shrunk 0.3 percent in the third, meeting the technical definition of
recession. While official data implies a similar decline in the third quarter
just ended, Markit said the PMIs suggest the downturn will accelerate into the
current quarter - a far gloomier prediction than in a Reuters poll last week.
"We
are more downbeat than the official data. The PMIs are running at levels in the
third quarter and start of the fourth quarter historically consistent with GDP
falling at about 0.6 percent," said Chris Williamson at data collator
Markit. Bad news has been flowing out of company boardrooms too. Carmaker
Volkswagen reported a fall in nine-month operating profit on Wednesday and
sportswear maker Puma (PUMG.DE)
reported sales in the region dropped in the third quarter. Heineken NV (HEIN.AS),
the world's third-largest brewer, reported a stronger than expected increase in
third-quarter revenue, but sold more beer everywhere except western Europe.
Markit's
measure of services business expectations sank to its lowest reading since
February 2009, at the nadir of the last recession and when world stock markets
were tumbling.
STABILISATION
IN CHINA
But it was
a different story for China
A Reuters
poll taken after last week's GDP data showed economists anticipating a modest
rebound in growth in Q4 to 7.7 percent from Q3's below-target 7.4 percent. Even
that figure would not be enough to lift full year expansion from an expected
13-year low, however. (Editing by Catherine Evans)
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