It’s that time of the month again when we see Markit publish the latest Eurozone Composite Purchasing Managers Index (PMI), and it doesn’t paint a pretty picture for the regions services and manufacturing sectors.
According to Markit Economics the Euro area services index for the Eurozone showed a sharp contraction in the region’s economic activity. It fell from 48.6 in January to 47.3 in February, far off target from the expected figure of 49.
Today’s data has also highlighted the growing gap between the region’s top two economies. The economic divide between France and Germany is growing suggesting that the Euro crisis has finally reached into the heart of the currency bloc.
Chris Williamson of Markit described the growing divide between Germany and France.
“Digging into the data shows increasing schisms within the Eurozone. National divergences between France and Germany have widened so far this year to the worst seen since the survey began in 1998. Germany is on course to grow in the first quarter. In contrast, Frances’s downturn is likely to deepen, bringing the euro area’s second-largest member more in line with the periphery than with the now solitary-looking German ‘core’.”
Economists for some reason have been predicting that the region was on course for a recovery, a recovery that to most eyes seems very far off. The situation across Europe continues to be bad; Portugal, Spain, Greece, Italy and now France are nations creating concern over a deepening recession. Unemployment continues to rise and it is only Germany that is covering the dismal picture. Without Germany we could expect to see far worse figures than we see now.
Capital Economics on the Eurozone data; “The fall in the composite euro-zone PMI in February puts a dent in hopes that the region would emerge from recession in the first quarter. On past form, the index points to a quarterly fall in GDP of about 0.3%, after Q4’s 0.6% falls….
The fall in the French PMI is more worrying – at face value the index is now consistent with a 1% quarterly fall in GDP. In all, then, the latest PMI number supports our view that the improvement in the financial markets will not be enough on its own to kick start an economic recovery.”
If France goes the same way as Spain it could prove catastrophic for the single currency and Europe.
Current Euro exchange rates
As of 10:30 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8667
The Euro to US Dollar exchange rate is currently trading in the region of 1.3188
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2881
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5811