The Standard & Poor’s purchasing managers’ index for October for the 19 countries in the Eurozone was published at 47.1, well down into contraction, with the manufacturing index even lower at 46.6. (below 50 for a survey indicates economic contraction). The overall index for Germany’s economy was easily the worst, at 44.1 and falling. “The situation economically is getting worse quite rapidly,” said the S&P chief economist Chris Williamson. “These numbers pose downside risk to a lot of people’s forecasts, notably the ECB’s.”
The United States purchasing managers’ index survey figures are also in contraction in October, though less sharply than those of Europe. Williamson’s comment on this: “The U.S. economic downturn gathered significant momentum in October, while confidence in the outlook also deteriorated sharply. The decline was led by a downward lurch in services activity, fueled by the rising cost of living and tightening financial conditions. While output in manufacturing remains more resilient for now, October saw a steep drop in demand for goods, meaning current output is only being maintained by firms eating into backlogs of previously placed orders…. No surprise to see firms cutting back sharply on their input buying to prepare for lower output in coming months.”
