EU flounders, China brakes; US slowing?
The euro zone is on track for its second recession in three years, China’s once booming manufacturing sector is contracting at a faster pace than previously reported, and the US is widely seen as struggling to keep up its pace of growth.
Business surveys released on Thursday painted a global picture of economic malaise from Beijing to Berlin.
The euro zone economy will shrink around 0.5% in the current quarter as the economic rot is even spreading through Germany, the region’s largest economy, Markit’s Purchasing Mangers' Index (PMI) suggested. It came on the heels of the HSBC Flash China manufacturing PMI falling to 47.8 for August, its lowest level since November and well down from July’s final figure of 49.3.
Growth in the US manufacturing sector is also expected to have slowed in August.
“The indicators taken indicate a material slowdown in the world economy,” said economist Philip Shaw at Investec.
The euro zone composite PMI, which measures manufacturing and services together, was actually slightly better than a month earlier, nudging up to 46.6 and just pipping forecasts for it to hold steady at July’s 46.5.
But was still its seventh month in a row below 50, the dividing line between contraction and growth.
German economic growth also slowed to 0.3% in the second quarter on a sharp drop in investment, adding to evidence that it can no longer be relied on to pull the euro zone out of a deep slump.