Fears of recession rise after gloomy data from U.S. and eurozone

Roman Schwartz
March 24, 2019

Softer rises in output, new orders and employment all weighed on the headline PMI in March and the manufacturing companies indicated a particularly weak improvement in business conditions during March.

"A gap has opened up between the manufacturing and service sectors, however, with goods-producers and exporters struggling amid a deteriorating external environment and concerns regarding the impact of trade wars", said IHS Markit Chief Business Economist Chris Williamson in prepared remarks.

The industrial powerhouse barely avoided falling into recession at the end of previous year as it suffered knock-on effects from America's trade war with China and new emissions tests hit the vital auto sector.

France's PMI data also fell as demand for exports tumbled amid yellow-vest protests and turmoil during the Algerian elections.

Softer business activity growth reflected more subdued demand conditions in March, with new work rising at the weakest pace since April 2017.

But the picture was brighter elsewhere in the eurozone.

Explosive device found in Limerick believed to be linked to United Kingdom packages
The "IRA" said it was responsible for placing a vehicle bomb which detonated outside a courthouse in Londonderry in January. Justice Minister Charlie Flanagan said the sending of a suspected letter bomb was "an absolutely despicable act".

Germany's 10-year government bond yield on Friday turned negative for the first time since October 2016, as a survey showing German manufacturing contracted for a third straight month fuelled concern about a widespread European slowdown. Hopes of a quick deal between Washington and Beijing that could help dispel weakness in global trade have so far been disappointed, with a new round of talks slated for next week in the Chinese capital.

The communique from Thursday's meeting of European Union leaders kept the door open to a longer extension if Prime Minister Theresa May, as expected, fails at the third attempt to gain parliament's approval for her negotiated exit deal.

Businesses across the Eurozone performed much worse than expected in March as factory activity contracted at the fastest pace in almost six years, hurt by a big drop in demand, a survey showed on Friday.

USA and European stock markets fell after a survey of German manufacturers delivered its lowest reading since the financial crisis.

The pan-European STOXX 600 index, which had opened higher on relief at the extension of Britain's Brexit deadline, slipped for a third day to close down 1.2 percent to take weekly losses to 1.3 percent - its steepest this year. "China trade and a global economic slowdown - there's little to be optimistic about".

In the fourth quarter of 2018, the German economy stagnated and only just managed to avert a recession and the German Council of Economic Experts recently halved its growth forecasts for Germany's gross domestic product (GDP) to 0.8 percent this year.

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