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Euro zone business growth stalls, outlook darkens - PMI

Video Credit: Reuters Studio - Duration: 01:37s - Published
Euro zone business growth stalls, outlook darkens - PMI

Euro zone business growth stalls, outlook darkens - PMI

Euro zone business growth was much weaker than expected this month, hurt by a deepening contraction in manufacturing.

As David Pollard reports, surveys published on Wednesday suggest conditions will get worse.

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Fast cars .... but slower business.

Automakers at the forefront of German industry are on the back foot right now ... And they're not the only ones.

A new survey shows the manufacturing recession across the euro zone's biggest economy got worse in July.

At 43.1, the sector's PMI reading is almost seven full points below the level that signals growth.

The news hit the euro badly: it's at a two-month low against the dollar.

As for carmakers, with new emissions rules, massive bills for going electric and global tariff wars, they're on a rough road.

Daimler disclosed a Q2 loss of 1.6 billion euros this week.

Markets now await VW's earnings.

(SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Those will not turn out that well.

Even more crucial will be the outlook.

We know that the global economy is not running that smoothly anymore." That includes France, which also cooled unexpectedly Though the data's not the only thing pushing the single currency down.

It's already lost two per cent this month as investors bet on dovish action from the European Central Bank.

If not at this week's policy meeting, then soon ... And possibly for some time to come.

(SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "It is clear: we will not see really high interest rates as long as the euro zone exists." Priced in by money markets this week: a 54 per cent chance of a 10 basis points cut.

Investors says it could also signal further cuts ahead - and even a fresh round of quantitative easing.




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