Thursday 6 September 2012

ECB meets as PMIs show greater economic contraction in euro area

The European Central Bank meets today for its monetary policy meeting amid reports that it is planning unlimited but sterilised purchases of government debt.

Some pressure to act at today's meeting would come from the weakness revealed in the latest data on the eurozone economy. From Bloomberg on Wednesday:

Euro-area services shrank more than initially estimated in August, adding to signs the 17-nation economy has slipped into a recession.

A gauge based on a survey of purchasing managers fell to 47.2 from 47.9 in July, London-based Markit Economics said today. That’s below an initial estimate of 47.5 published on Aug. 23. A composite index of both services and manufacturing fell to 46.3 from 46.5, also below an initial estimate.

Another report on Wednesday showed that retail sales in the euro area fell 0.2 percent in July.

Meanwhile, China's economy has also been showing signs of weakness, the latest being a decline in HSBC's services PMI to 52.0 in August from 53.1 in July.

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