The latest flash purchasing managers’ indexes from Markit do not paint a pretty picture for anyone.
The Flash data, which comes out about a week before the finalised figures and are based on 85-90% of the results, are usually a good indicator of where the final numbers will fall.
The Markit Flash Eurozone Purchasing Managers’ Index (PMI) for August stands at 46.6, a very slight increase on July’s 46.5 but still short of the important 50 mark above which indicates growth. This is the seventh contraction in a row.
But the Eurozone is not just being dragged down by the usual suspects. The rot seems to be spreading into the powerhouse that is Germany. The Markit Flash Germany PMI shows a fall from 47.5 in July to 47 in August. This said Markit “…pointed to a steep and accelerated reduction in new business received by private sector companies across Germany. The overall pace of decline was the most marked since June 2009, reflecting sharp decreases in both the manufacturing and service sectors.”
The Markit Flash France PMI did though see a rise from 47.9 in July to 48.9 in August, but being below 50 still indicates contraction for the sixth straight month. The one plus here was that the Flash France Services Activity Index managed to break above the all important 50 mark to post 50.2. This managed to offset in part the Manufacturing and Manufacturing Output Indexes of 46.2 and 46.1 respectively.
Now for those who believe that our saviours will be customers from countries faring better further afield the Chinese data was also disappointing. The HSBC Flash China Manufacturing PMI fell to 47.8 from July’s 49.3, which is a nine month low. The country’s Manufacturing Output Index fell through the 50 point from 50.9 in July to 47.9 in August.
Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “Falling orders dragged down the August flash PMI to a nine-month low, suggesting Chinese producers are still struggling with strong global headwinds. To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months.”
If all these countries are contracting then who will buy our goods if our own population either won’t or can’t?
Image by Uwe Hermann (Photo taken by Uwe Hermann) [CC-BY-SA-2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons