The nine month contraction in Eurozone Manufacturing PMI continued in April with a drop to 45.9 – a 34-month low and well below the 50.0 level that separates growth from shrinkage. Manufacturing PMI’s fell across the Eurozone with the core economies of Germany and France even posting weak results. Unemployment across the 17-nation bloc also took a turn for the worse; rising to 10.9% – its worst ever level.
Here is the Eurozone Manufacturing PMI league table:
- Austria – 51.2 4-month low
- Ireland – 50.1 2-month low
- Netherlands – 49.0 3-month low
- France – 46.9 2-month high
- Germany – 46.2 33-month low
- Italy – 43.8 6-month low
- Spain – 43.5 34-month low
- Greece – 40.7 2-month low
As you can see it does not read well for the single currency and its fragile growth prospects. The sobering subtext to take away from this morning’s data is that toxic austerity has poisoned the Eurozone so badly that even Germany has begun to feel its sickly effects. Germany: normally Mr Reliable; Mr efficient; and Mr Recession-proof with its ultralow unemployment, competitive consumer spending, and almost-arrogantly effective work ethic, has now suffered a wound from its own carefully-designed sword.
As Chris Williamson from Markit said:
“Austerity in deficit-fighting countries is having an increasing impact on demand across the region. Even German manufacturing output showed a renewed decline, attributed by many firms to weak demand from southern Europe.
As such, it is hard to see where growth will come from in coming months, unless export demand picks up strongly from countries outside of the Eurozone.
The ECB’s latest forecast of merely a slight contraction of GDP this year is therefore already looking optimistic.”
Many dissident economists, conspiracy theory susceptible business journalists, and closet-case Nazi’s have accused Germany and its Chancellor Angela Merkel of using the European project as a vehicle to keep German export prices low whilst still allowing the economy to grow at a rapid pace. Although the idea of a contemporary European empire domineered by Germany sounds a bit like a pastiche of the early 20th Century, some of the parallels are remarkable.
Set to a backdrop of economic recession; depression; spiralling unemployment; and dwindling world trade the current financial crisis bears many similarities to the severe worldwide downturn of the 1930’s. Far right governments are gaining support all over the continent, with nationalist Marine Le Penn achieving the French National Front’s highest ever score of 17.9% in the first round of the general elections and the Greek Golden Dawn party – who aim to lace the borders with landmines and electric fences – looking increasingly likely to earn themselves a first ever set of seats in parliament. I’m not saying that the German-led austerity ridden Europe of today is as bad as the Hitler-led great depression suffering Europe of yesteryear… but there are similarities none the less.
Comments are closed.