Manufacturing helped lead the eurozone out of its last recession. But with manufacturing now on a sharp decline – along with the other problems ailing European countries – it could soon slip back into recessionary times.
Making matters worse, it’s not the usual suspects that are to blame, but Germany and France.
Germany’s manufacturing sector is declining faster than it has in over three years. And factory activity in France is dropping as sharply as it did in May 2009.
Chris Williamson, Chief Economist at Markit, says, “Some of these leading indicators are still very negative, increasingly negative, suggesting that conditions could worsen further.”
For instance, a reading lower than 50 for Markit’s Manufacturing Purchasing Managers’ Index indicates a current contraction in the economy. For July, the Index slumped to 44.1.
So the situation is not likely to improve any time soon.