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European manufacturing shrinks at slower pace in August

Publish Date23/08/2012 08:50:05 AM

Last Update23/08/2012 08:57:12 AM

European manufacturing shrinks at slower pace in August

European manufacturers continue to surf against the wind as factory growth in France, Germany and the euro area remains fragile, strongly hammered by slowing European economies and a three-year-old debt crisis that roiled the euro region.

A preliminary reading of the euro zone`s PMI Composite for August notched a level of 46.6, from 46.5 in July, beating analysts` average estimate of an unchanged reading, still the index has now signaled a contraction for a seventh straight month.

The euro zone economy contracted at 0.2 percent rate in the second quarter as European leaders strive to contain the debt crisis that risked the health of the euro zone economies amid the deepening budget cuts that crippled demand and jobs.

PMI Manufacturing notched a flash estimate of 45.3 from 44.0 in July, Markit data showed on Thursday, while a gauge of services activity fell to 47.5 from 47.9. Others measures from Germany and France signaled mixed outputs as well.

A preliminary reading of France`s PMI Manufacturing for August notched a level of 46.2, from 43.4 in July, beating analysts` average estimate of 43.7. PMI Services was at 50.2 this month, from 5.0 a month ago and forecasted as well.

Germany`s PMI manufacturing also registered a level of 45.1, another slight improvement from 43.0 in July, beating expectations for 43.4, while German services gauge fell to 48.3 from 50.3 in July, missing median forecast of 50.1

Investors are becoming more fretted about the business climate and the darkening outlook of Europe`s debt crisis, where euro zone confidence stalls at a two-year low and unemployment stands at a record high of 11.2 percent in June.

With all these mixed warnings about the state of European economies, expectations build up a possible European Central Bank intervention in the bond market to ease fiscal strains and stimulate spending and so on to hopefully kick back growth.

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