Euro Zone Set for Stagnation As Weak PMIs Rattle Markets - Investing.com

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Investing.com - The Eurozone economy ended the first quarter on a low note as the two largest manufacturing sectors in the region contracted in March, according to survey data released on Friday.

A preliminary reading for manufacturing activity in the euro zone fell to its lowest level since 2013, and the worst is probably still to come, said survey publisher IHS Markit.

The news shook European stock and bond markets, and pushed the below $1.13 for the first time in 10 days. The fell 0.5% to its lowest in a week, while the yield on the benchmark 10-year German government bond fell briefly below 0% for the first time since the autumn of 2016. It was at 0.00% by 05:30 AM ET (09:30 GMT)

“Forward-looking indicators such as business optimism and backlogs of work suggest that growth could be even weaker in the second quarter," said IHS economist Chris Williamson. "Worryingly, with order book backlogs shrinking at the steepest rate since late-2014, more and more companies are pulling back on hiring, and likely reviewing their investment spending."

Markit said that its flash PMI fell to 47.6 from 49.3 in January, its lowest since May 2013. Analysts had expected a reading of 49.5.

The , which measures the combined output of both the manufacturing and service sectors, fell to 51.3 this month, from 51.9 in February. It was supported by a stronger performance in , where the index fell to 52.7 from 52.8 in February, in line with expectations.

An index reading above 50.0 indicates expansion, while one below it indicates contraction.

At its last policy meeting on March 7, the European Central Bank pushed back its timeline for raising interest rates and announced a new round of low-cost funding to banks, known as TLTROs, effectively admitting that the slowdown across the euro zone’s economy will last longer than it first thought.

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2019-03-22 10:01:00Z
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