Eurozone factories sank deeper into recession in December as new orders tumbled, business surveys showed yesterday, a sharp contrast to continuing signs of revival in China.
US manufacturing reports, to be released later in the day, are expected to show activity in the world’s largest economy to have expanded modestly.
Purchasing managers’ surveys in the 17-nation eurozone showed economic decline spread further into the core members, suggesting the overall economy may have slipped deeper into recession at the end of 2012.
Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) edged down to 46.1 in December from November’s 46.2, below a flash reading of 46.3. It has been below the 50 mark that divides growth from contraction since August 2011.
“It’s pretty grim really,” said Jonathan Loynes at Capital Economics. “These surveys are pointing to a pretty deep recession. If the German industrial sector is contracting quite sharply it is pretty hard to see where growth across the eurozone as a whole is going to come from.”
Germany, Europe’s largest economy, saw its crucial manufacturing sector shrink for the 10th straight month and at a faster pace, while French data showed a decline in all but one of the past 17 months. The slump in Spain deepened, while Italy’s index, although improved, remained below 50 for the 17th month.
Ireland was the only member of the currency union to show manufacturing growth in December.
Separate data yesterday showed French car sales dropped 15 per cent in December, the worst annual performance in 15 years, while Spanish new car registrations were down 23 per cent.
But British factory activity jumped unexpectedly to grow at its fastest pace since September 2011, raising the chance that its economy eked out some growth at the end of 2012.
“The sector seems to be showing some signs of improvement – probably as the eurozone crisis is easing a little bit and Chinese growth is bottoming out,” said Rob Wood at Berenberg Bank.
In Asia as a whole manufacturing activity expanded, driven by revival in China’s economy, but export demand was uneven, pointing to further sluggish growth for the region.