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Fall in PMI data points to recession

Fall in PMI data points to recession

Eurozone manufacturing Purchasing Managers’ Index (PMI) data stood at 46.1 in September , well below the 50 mark indicating contraction. This PMI data is seen as the worst performance in the three months to September, with factories hit by falling demand despite cutting prices. Thus, manufacturing acts as a major drag on economy and it therefore seems inevitable that the region will have fallen back into a new recession in the third quarter.

Meanwhile the data from Asian manufacturers contracted for a second straight month in September, continuing to struggle in the face of tepid demand from the United States and Europe, according to business surveys and data releases on Monday that underlined the fragility of the global economy. The survey in China , the most closely watched by investors, underscored expectations that the motor of the global economy in recent years almost endured a seventh straight quarter of slowing growth. The global currents dragging on China are also being felt in its next largest rival Japan, where the quarterly Bank of Japan “tankan” survey of business sentiment underscored the central bank’s view that growth in the export reliant economy will stall in the remainder of the financial year to March 2013.

Even the UK manufacturing sector has lost momentum again at the end of the third quarter, with firms suffering the double blow of falling output and rising costs. The UK PMI Manufacturing contraction accelerated in September to 48.4 points from 49.5 points in August . At the moment sterling is struggling to make too much in the way of gains against the dollar and the euro in the current environment. The GBP EUR is currently trading at a range of 1.2530-1.2593.

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