Manufacturing in the eurozone has fallen for the 11th straight month. The Purchasing Manager’s Index (PMI) dropped to 46.1 in April – 2.5 points lower than in March and 3.9 points below the the 50-point level that signifies growth in the sector.
Michael Hewson, European Economist at CMC Markets, says France and Germany, in particular, will suffer the effects of the contraction, because “they make a much larger proportion of European GDP.”
And Hewson says the manufacturing contraction isn’t likely to end soon:
“I think a bottoming out is a long way off because of the sharp drop we’ve seen in Spanish and Italian PMIs over the past month.”
As analysts consider manufacturing to be a key forward-looking indicator of economic health, pessimism is growing that if it doesn’t pick up soon, the eurozone has much more rehabilitation and instability ahead of it.