Europe marches into recession

It shouldn’t really be news to anyone, but the latest PMI data once again shows that Europe is heading into technical recession. Comments from Rob Dobson, senior economist at Markit Economics, give a good wrap of the data:

The August Markit Eurozone Flash PMI reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012. Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook.
The downturn is still led by the manufacturing sector, despite its pace of contraction easing a little this month. The service sector is also not out the woods, as business activity declined at an accelerated pace.
The real interest inevitably comes from the national breakdown. Hopes that German economic strength will aid recovery in the broader currency union were dealt a blow by its rate of economic contraction accelerating, and further signs that its export engine has slammed into reverse gear. France may be edging closer to stabilisation, while conditions outside of the big-two remain weak overall. This is leading to job losses across much of the region, although Germany did provide some brighter news by bucking this trend and raising payroll numbers.
On the price front, manufacturers are still benefitting from declining input costs. Alongside further selling price discounts from both manufacturers and service providers alike, this suggests that inflationary pressures will at least remain muted in the near term.

Read more: http://www.macrobusiness.com.au/2012/08/europe-marches-into-recession/