Financial research firm Markit this morning reported that the flash PMI index for the Eurozone has contracted for the seventh consecutive month in August. The August reading of 46.6 is virtually unchanged from July's reading of 46.5. An index reading below 50 indicates that the economy is contracting.
The drop in overall output was led by the 13th consecutive drop in new orders. And although manufacturing PMI continues to contract, the August reading of 45.3 is the highest in four months. New export orders also contracted for the 14th straight month and employment levels declined for the 8th consecutive month.
Markit's senior economist said:
The August Markit Eurozone Flash PMI reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012. Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook.
Markit also notes that the German export engine that has been driving Eurozone economic activity has stalled. Not only are exports to other Eurozone members falling, but exports to Asia are also slowing down.
Input prices for the manufacturing sector fell for the third straight month, as did output prices. That indicates that "inflationary pressures will at least remain muted in the near term."
The Markit report is available here.
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