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Euro zone on brink of recession

posted 23 Nov 2011, 05:23 by Mpelembe   [ updated 23 Nov 2011, 05:26 ]

The euro zone's private sector has contracted for a third month as the paralysing debt crisis drags the currency bloc to the brink of recession.

EUROPE-ECONOMY - The German economy's holding its ground -- but only just.

That's message from the latest round of manufacturing and services data out on Wednesday.

Rob Dobson is a senior economist at Markit, the firm behind the results.


"We're looking at Germany heading towards stagnation, not quite there yet. But we'll need to see services holding its ground and manufacturing holding its ground at these levels if we're going to see that continue."

The overall PMI for November held a fraction above the 50 mark, a level seen as the border where contraction begins.

That was kept up only by a boost to services, with manufacturing down below forecast.

But elsewhere in the euro zone, it was a far more gloomy picture.

November figures for all 17-nations suggest a downturn has spread to the region's core, with manufacturing output now at its lowest level since June 2009.

Torge Middendorf in a senior economist at West LB.


"We already saw weak PMI from China today which confirms our view that the world economy is slowing. So the manufacturing sector in Germany is especially hit. But those PMI numbers I think also confirm our view that the German economy is not shrinking as some other big euro zone countries."

There are certainly signs of hope in Germany's economic data.

Low unemployment, cheap loans and solid public finances mean there's potential to kick-start domestic demand.

But as a member of euro zone, the future for Germany could indeed hang on the fortunes of its neighbours.

Ruairidh Villar, Reuters.