Everyone knows that Europe’s economy is a dead man walking but I’ll throw a few more figures at you so that there is no doubt left in your mind.
The Markit Economics French manufacturing PMI is still contracting at a rapid pace. The summary of the figures said that:
‘Operating conditions in the French manufacturing sector continued to worsen in March. Although the headline Purchasing Managers’ Index inched up to a three-month high of 44.0, from 43.9 in February, it continued to signal a marked rate of deterioration.
‘The level of incoming new orders placed with manufacturers in France decreased further during March, extending the current period of contraction to 21 months. Moreover, the pace of decline accelerated slightly since February.
‘Reduced workloads prompted French manufacturers to cut staffing levels further in March. The rate of job shedding was solid, albeit the slowest in three months.
‘Prices charged by French manufacturers for finished goods fell for the third month running during March. Furthermore, the rate of decline accelerated to the sharpest since November 2009. A number of survey respondents commented that strong competitive pressures had weighed on their pricing power.’
It doesn’t take a genius to work out that where the PMI goes manufacturing production and GDP follow.
Things don’t look good for the foreseeable future in France. Especially when the socialist Hollande is hell bent on driving every wealthy person out of France with his 75% tax. Now the soccer heroes will be under attack as well. My prediction is that French soccer takes a nosedive over the next year.
Mish’s Global Economic Trend Analysis revealed that Spain is also a complete basket case, with El Economista reporting that:
‘The Institute of International Finance (IIF) believes the Spanish economy contraction will accelerate to register a gross domestic product (GDP) decline of 2%.‘“The decline in GDP seems likely to accelerate to 2% in 2013 after 1.4% in 2012, as high unemployment, tight monetary conditions and current lower wages further reduce domestic spending and weak demand contain domestic exports,” said the IIF in a report on the Eurozone.’
Spain’s manufacturing PMI is also plummeting with a reading of 44.2 in March from 46.8 in February. Andrew Harker, an economist at Markit, said that:
‘The March PMI data for Spain make grim reading for the manufacturing sector. Moreover, the latest figures have brought an end to the recent period of moderating declines, and cast doubt on any hopes of recovery for the rest of the year. The employment index again highlighted the extent of the problems currently afflicting the manufacturing sector and the wider Spanish economy, with jobs cut at the fastest pace in more than three years.’
So there is no end in sight for the bad economic news coming out of Europe. Cyprus has imploded and Greece is on life support. Italy has no prospect of forming a government and Spain and France are still contracting at a rapid pace.
Murray Dawes
Editor, Slipstream Trader
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