Europe’s Economic Decline Signals Recession Warning
Eurozone factory activity in December 2023 sustained its downward trend, marking a concerning 18th consecutive month of contraction. This extended decline suggests an imminent economic downturn within the bloc.
The data stems from the HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI), a report compiled by S&P Global. This index gathers insights through monthly surveys sent to manufacturers in Germany, France, Italy, Spain, the Netherlands, Austria, Ireland, and Greece, covering about 3,000 private-sector companies.
Considered a reliable measure of economic well-being, the manufacturing index dropped slightly from 44.6 in November to 44.4 in December, persistently staying below the pivotal 50-point mark that indicates growth or contraction.
On a scale of one to 100, Greece reported the highest figure in four months at 51.3. However, all other countries, including Ireland (48.9), Spain (46), Italy (45.3), the Netherlands (44.8), Germany (43.3), France (42.1), and Austria (42.0), recorded scores below 50. France notably hit a 43-month low.
The survey revealed ongoing declines in production and factory job losses for the seventh consecutive month, providing little assurance of a robust economic recovery and indicating an impending recession, according to Reuters news agency.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, voiced strong concerns that this persistently bleak trend signals a contraction in the eurozone’s GDP for the last quarter.
After a 0.1 percent economic contraction in the third quarter, a second consecutive decline would technically signify a recession.
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“The HCOB PMI’s continuous portrayal of a downturn in the eurozone’s manufacturing sector offers minimal improvement from November, painting a grim outlook and strongly hinting at a recession’s onset in the third quarter,” noted de la Rubia.
An early December Reuters poll, encompassing the 20-country eurozone, anticipates a brief and mild economic downturn during the upcoming winter.
Despite the overall factory data contraction, specific sub-indices provided glimpses of positivity. Although the decrease in new orders and purchasing activity showed signs of slowing down, business confidence surged to its highest level in eight months, as per the Trading Economics website.
Despite a marginal uptick in the new orders sub-index, inching from 41.5 to 42.0, it remained below the crucial 50-point threshold throughout 2023.
Alexander Stefanov
Reporter at CoinsPress
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