According to the latest preliminary Purchasing managers index private sector activity across the 17-nation Eurozone has contracted at its fastest pace since June 2009. The Euro has weakened as a result.
The data compiled by Markit showed that the Eurozone index has fallen to 45.9 from 46.3 in August, defying economists’ forecasts for a rise to 46.7. Any figure below 50 indicates contraction. The contraction was driven by services, with the PMI for the sector falling to a 38-month low of 46.0 from 47.2 in August. The manufacturing PMI rose to 46.0, its highest level in six months, from 45.1 in August.
Germany, the Eurozone’s largest economy came close to stabilising its private sector output in September. The sector rose to 49.7 in September, up from 47 in August. Activity struck a five-month high and activity in the service sector rose to a four-month high of 50.6 in September, up from 48.3 in August.
Tim Moore, senior economist at Markit said; “Germany managed to shake off the summertime blues in September, with renewed services growth helping to stabilise private sector output as a whole. Manufacturing also made a contribution to the slightly less gloomy picture, albeit simply by achieving a slower contraction of production compared to August.”
France however showed signs that the country is sliding ever close to an inevitable recession with the PMI showing that the country’s private sector output suffered its biggest decline since April 2009. Output fell to 44.1 in September down from 48 as recorded in August. The disappointing figure marks a 41-month low. The nation’s services activity fell to 46.1 from 49.2 with manufacturing slumping to 42.6 from 46.
Jack Kennedy, senior economist at Markit commented; “French private sector output slumped in September, falling at the steepest rate in nearly three-and-a-half years. All the more concerning was the fact that new business and employment also showed accelerated declines, while service providers’ future expectations slipped into negativity for the first time since early 2009.”
Today’s disappointing figures have reinforced the markets belief that the Eurozone’s decline into recession is now inevitable. As a result the Euro has declined against all of its peers as demand for the currency wanes as traders and investors grow weary over the state of the region’s economic health once again.
Chris Williamson at Markit said: “The Eurozone downturn gathered further momentum in September, suggesting that the region suffered the worst quarter for three years.We had hoped that the news regarding the ECB’s intervention to alleviate the debt crisis would have lifted business confidence, but instead sentiment appears to have taken a turn for the worse, with businesses the most gloomy since early-2009 due to ongoing headwinds from slower global growth.”
The Pound to Euro exchange rate is currently trading at 1.2495
The Pound to US Dollar exchange rate is currently trading at 1.6195
The Pound to Australian Dollar exchange rate is currently trading at 1.5577
The Euro to US Dollar exchange rate is currently trading at 1.2959
The Euro to Pound exchange rate is currently trading at 0.8001
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