Daily Management Review

Germany Loses Momentum as 20-Month Low Hit by Eurozoe Business Growth


09/23/2016




Germany Loses Momentum as 20-Month Low Hit by Eurozoe Business Growth
Indicating that the economic upturn in the region is fragile and failing to achieve any real traction, there was more bad news for euro zone on Friday with the latest flash purchasing manager's index (PMI) falling to a near two-year low.
 
The business activity in the 19-country region fell to 52.6 in September versus 52.9 in August and below market expectations, shows the preliminary PMI from Markit. Since January 2015, this is the lowest figure seen. The 50-point PMI mark separates expansion from contraction and s a composite of services and manufacturing activity in the region.
 
"The door remains open for policymakers to provide further policy support later in the year if they see economic conditions moderate further," Rob Dobson, senior economist at IHS Markit said in the press release.
 
France’s ongoing stagnation in manufacturing was offset by a robust increase in service sector activity, the data showed. And hence, according to IHS Markit, this for the first time in over four years, led the French Composite PMI to rise above its German counterpart.
 
“Slower growth in the German powerhouse and elsewhere in the currency union suggest the upturn will remain uneven by country heading into the final quarter (of 2016)," Dobson added.
 
Hitting a 16-month low, the flash composite PMI of Germany fall to 52.7 in September versus 53.3 in August, showed Germany's data, released earlier on Friday morning. Service providers reported a near-stagnation of output during the month while manufacturers recorded ongoing solid growth, the figures showed.
 
“The rate of expansion in Germany remained "uninspiring and much weaker than the levels seen around the turn of the year," said Oliver Kolodseike, an economist at IHS Markit.

"A big concern is the divergent trends within the economy, with service providers struggling to eke out any meaningful growth ... Weak demand continued to curb inflows of new business and companies reported a lack of work outstanding, boding ill for output growth in coming months," he said in a press release.
 
Pressure on the European Central Bank to take action will continue to mount, believes Stephen Brown, a European economist at Capital Economics. "We expect it to announce an extension of its asset purchase program in December, if not before."
 
Meanwhile in the U.K., in the wake of the U.K.'s decision on June 23 to leave the European Union (EU), there has been a slump in financial sector recruitment, says the latest research.
 
Compared with the similar period in previous years, there was "an uncharacteristic downturn" in job postings in the finance sector during the period May/June to July/August in 2016, finds a report from research institute and think tank IPPR.
 
The IPPR said on Friday that in the finance sector, there was a 13.6 percent drop in London in job postings in the sector and a 10 percent drop across England.
 
The findings were "striking as it is the only year in the past four where this trend has occurred," the institute said.
 
(Source:www.cnbc.com) 






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