Friday, 23 November 2012

Eurozone economy continues to shrink but Chinese manufacturing returns to expansion

Reuters reports that the euro area faces its deepest downturn since early 2009.

The euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Service sector firms like banks and hotels that comprise the bulk of the economy fared particularly badly this month, and laid off staff at a faster pace...

"The concern about the outlook is getting worse as we move towards the end of the year," said Chris Williamson, chief economist from Markit.

According to Markit's flash report on Thursday, the service sector PMI for the euro area fell to 45.7 this month, its lowest reading since July 2009, from 46.0 in October even as the manufacturing PMI rose to 46.2, its best showing since March, from 45.4 in October.

The composite PMI rose to 45.8 in November from 45.7 in October.

Markit said that the PMIs were consistent with the economy shrinking around 0.5 percent in this quarter, which would be the sharpest contraction since the first quarter of 2009.

Another report on the eurozone economy on Thursday showed that consumer confidence in the region deteriorated in November, with the flash consumer confidence index falling to -26.9 from -25.7 in October.

Meanwhile, however, China's economy continued to show signs of improvement. A report from HSBC on Thursday showed that its China manufacturing PMI rose to 50.4 in November from 49.5 in October. This indicates that manufacturing activity in China expanded in November for the first time in 13 months.

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