Germany's economy is on the brink of recession, reflecting the deepening hit to its factories from the U.S.-China trade war, uncertainty around the U.K.'s departure from the European Union, and problems in its key automobile sector.
A survey of purchasing managers released Monday showed signs that weakness is spreading to Germany's services sector, which has seen robust growth over recent quarters even as manufacturing output has declined.
The slowdown in Europe's largest economy has been led by its manufacturing sector, which is heavily dependent on exports and has been hit by weakening demand from the U.K., China, Turkey and elsewhere over the past year.
The Stoxx Europe 600 fell 0.9% in morning trade, with the banking and autos sectors each down 2.6%. "The manufacturing numbers are simply awful," said Phil Smith, an economist at IHS Markit, which compiles the PMI. "All the uncertainty around trade wars, the outlook for the car industry and Brexit are paralyzing order books."
The PMI for the services sector hit a nine-month low in September, and the composite PMI-which measures total business activity-fell to 49.1 from 51.7 in August, reaching its lowest level since October 2012.
"The longer the weakness in manufacturing persists, the greater the risks that other sectors of the economy will be affected by the slowdown."
"Even with its economy stuttering, we think a large structural German stimulus is still unlikely given the politics," said Simon Wells, an economist at HSBC. IHS Markit said its measure of activity for France also declined in September, reaching a four-month low as the manufacturing sector stagnated and the services sector weakened.
https://www.wsj.com/articles/germany-on-brink-of-recession-as-factories-slump-11569237721?mod=hp_lista_pos2
A survey of purchasing managers released Monday showed signs that weakness is spreading to Germany's services sector, which has seen robust growth over recent quarters even as manufacturing output has declined.
The slowdown in Europe's largest economy has been led by its manufacturing sector, which is heavily dependent on exports and has been hit by weakening demand from the U.K., China, Turkey and elsewhere over the past year.
The Stoxx Europe 600 fell 0.9% in morning trade, with the banking and autos sectors each down 2.6%. "The manufacturing numbers are simply awful," said Phil Smith, an economist at IHS Markit, which compiles the PMI. "All the uncertainty around trade wars, the outlook for the car industry and Brexit are paralyzing order books."
The PMI for the services sector hit a nine-month low in September, and the composite PMI-which measures total business activity-fell to 49.1 from 51.7 in August, reaching its lowest level since October 2012.
"The longer the weakness in manufacturing persists, the greater the risks that other sectors of the economy will be affected by the slowdown."
"Even with its economy stuttering, we think a large structural German stimulus is still unlikely given the politics," said Simon Wells, an economist at HSBC. IHS Markit said its measure of activity for France also declined in September, reaching a four-month low as the manufacturing sector stagnated and the services sector weakened.
https://www.wsj.com/articles/germany-on-brink-of-recession-as-factories-slump-11569237721?mod=hp_lista_pos2
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