PMI accelerates the downside of the euro zone into a recession
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December 12 18:11:23, 2018
The sluggish economy has made the euro zone's efforts to resolve the sovereign debt crisis more complicated. Data released on Monday showed that the benchmark index, which measures the level of manufacturing and service industries in the euro zone, fell to its lowest level in more than two years. Analysts believe that the latest data shows that the risk of a new round of recession in the euro zone economy has increased significantly due to the financial austerity caused by market turmoil and debt crisis. "Dr. Doom" Lubini said that in the next 12 months, the probability of the US and European economies falling into recession is 50%. Manufacturing shrinks for three consecutive months According to preliminary data released by the London research institute Markit Economics on the 24th, the comprehensive PMI index, which measures the health of the manufacturing and service industries in the Eurozone, fell further to 47.2 in October, compared with 49.1 in the previous month. The indicator also hit the lowest level since July 2009. Previous market expectations were 48.8. Separately, the manufacturing PMI fell to 47.3 in October from 48.5, which was below 50 for the third consecutive month, while the service PMI fell from 48.8 in September to 47.2 this month. For the second consecutive month below 50. PMI below 50 indicates that the industry is shrinking, and vice versa. Williamson, chief economist at Markit Economics, which is responsible for compiling the above data, said that most of the latest indicators predict that the economic situation in the euro zone will become worse in the coming months, so the economy may shrink in the fourth quarter. Sex is "very big." According to his estimation, from the PMI data, the euro zone economy may shrink by about 0.5% in the fourth quarter. "At the moment, it's hard to imagine any change in the situation in the first quarter of next year, unless European leaders reach a credible crisis solution in the next few weeks to reshape everyone's confidence," Williamson said. Economists pointed out that in the next few quarters, the euro zone will face a "bad" to prevent the economy from falling into recession. In the short term, the major economies in the euro zone will need to continue to reduce spending due to the debt crisis, and this will In turn, it will put pressure on economic growth next year. The probability of a second recession in the West is 50%. According to EU estimates, the euro zone economy may slow down further in the third quarter, and the growth rate will drop to 0.2%. The fourth quarter may be further reduced to 0.1%. The European Central Bank has also cut its forecast for economic growth in the euro zone this year from the previous 1.6% to 1.3%. In addition to the heavily indebted countries, the core economies of the euro zone are also showing signs of fatigue. The German business confidence index fell to a 16-month low in October, and consumer confidence in the euro zone continued to fall. Currently, the leaders of the euro zone are intensively conducting consultations on the introduction of a comprehensive crisis resolution mechanism. At the second summit on the 26th, EU leaders are expected to give an answer. US economist Roubini, who is known as Dr. Doomsday, said on Monday that the probability of a recession in the US, UK and Eurozone economies will reach 50% in the next 12 months. In a speech in Jakarta on Monday, Roubini said that Europe's current efforts are not enough to end the sovereign debt crisis. He said that the impact of the debt crisis has spread to some French and Belgian banks. "Unfortunately, in my opinion, the United States, the Eurozone, the United Kingdom, and most developed economies will have at least a 50% chance of falling into recession or downturn in the next 12 months, rather than accelerating economic growth," Roubini said. Earlier, Thomson Reuters survey showed that analysts expect the probability of the euro zone falling into recession again is 40%. The results of the summit may be difficult to satisfy the market. At the summit on the 23rd, the leaders of the euro zone discussed issues such as enhancing crisis response. It is reported that the meeting formulated the assistance plan of the euro zone banks and ruled out the previous proposal by France to provide follow-up funds for the European Financial Stability Fund through the European Central Bank. The meeting also ruled out the possibility of mandatory restructuring of Greek debt and insisted on the policy of bondholders voluntarily accepting losses. A more detailed comprehensive response plan may be released at the 26th summit. Encouraged by the optimistic expectations that the EU may be close to reaching a crisis bailout plan, the European and American stock markets on Friday and the Asia-Pacific stock market on Monday both rose sharply. European stock markets also rose on Monday, but after the weak PMI report was released, major stock markets turned down and the euro fell sharply. As of 17:30 on the 24th, Beijing time, the UK stock market rose slightly by 0.3%, the French stock market fell 0.3%, and the German stock market, which once rose more than 1%, has also narrowed significantly to 0.2%. The euro fell 0.3% against the US dollar. Barclays Capital’s latest report said that the results of the latest EU summit may not be satisfactory, which will put pressure on the stock market, credit market and commodity market. The bank pointed out that before the final outcome of the next EU summit on Wednesday, the market will remain volatile and liquidity will weaken. In addition, Barclays believes that according to the latest news, the contribution of the private sector in the Greek aid program is expected to reach at least 50%, which may put pressure on bank stocks and related credit products. The bank advises investors to remain cautious until a more tangible policy statement is announced in Europe, and it is not appropriate to open a position before the policy statement is announced.