Well, barely a week after the bailout plan, here's more bad news for the ECB's Mario Draghi. The Markit Flash Eurozone Purchasing Managers’ Composite Output Index (that is one helluva a mouthful), fell to 45.9 in September, which is the lowest it has been for 39 months. This is also down from 46.3 in August. Anything below 50 is considered a contraction and anything above, positive growth. Shucks.
Look a bit deeper into the figures and there is a tiny sliver of salvation to be had. The main figure is derived from a combination of both services and manufacturing. Services PMI fell from 47.2 to 46, which is obviously not ideal, but equally, the manufacturing PMI output index rose from 44.4 in August, to 45.5 in September. Whilst this is only a modest rise, and still indicates contraction, it at least means that the rate of contraction is slowing down.
Maybe we’re clutching at straws. On the strength of this latest survey, Markit said it is likely that the eurozone (in its entirety) is on its way back into recession. Markit’s chief economist, Chris Williamson, said: ‘We had hoped that the news regarding the ECB’s intervention to alleviate the debt crisis would have lifted business confidence, but instead sentiment appears to have taken a turn for the worse, with businesses the most gloomy since early-2009 due to ongoing headwinds from slower global growth.’ If even Chris doesn’t want to put a positive spin on things, you know we’re in a bit of trouble.
Still, we’ve been in ‘trouble’ with the eurozone and various economic issues for the last five years. Economic Armageddon has not yet hit, and there are some signs that the UK may return to extremely modest growth in Q3. Here’s hoping for some good economic news to report at long last…