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Europe Undeniably In Recession.

  • Written by Syndicated Publisher 44 Comments44 Comments Comments
    November 3, 2011

    Berlin halved its 2012 German economic forecast for 2012 to one percent. What does that say for the rest of Europe? Will Germany even grow at all?

    While pondering those questions please note German manufacturing shrinks in Oct for 1st time in 2 years

    Germany’s manufacturing sector contracted in October for the first time in more than two years as new orders fell for a fourth month in a row, data showed on Wednesday in the latest sign Europe’s bulwark economy is set for a sharp slowdown.

    Markit’s Purchasing Managers’ Index (PMI) fell for a sixth consecutive month in October to hit 49.1 — just above an initial estimate of 48.9 but below the key 50 line that divides growth from contraction.

    It was the first time activity had shrunk since September 2009 and it was the lowest PMI reading since July 2009. The sub-index for new orders fell to 45.1, showing the outlook is darkening for the German economy, which recovered from the financial crisis faster-than-expected and outperformed its peers over the past year.

    The reading for export orders fell even further in a fresh sign that weakness in key markets abroad and uncertainty due to the euro zone debt crisis is hurting German trade.

    Berlin last month nearly halved its forecast for 2012 growth to 1 percent due to weaker expectations for exports.

    Trend Not Your Friend

    Unless you are hoping for recession, the trend is not your friend as this table of October Final Manufacturing PMI shows.

    Europe Undeniably in Recession

    With China slowing, the US slowing, and much of the rest of Europe in widely-recognized contraction, the vaunted German export machine has a shrinking pool of able and willing buyers.

    Europe is clearly in recession now, including Germany. Expect a dramatic and escalating turn for the worse, because it’s coming.

    Mike “Mish” Shedlock

    Images: Flickr (licence attribution)

    About The Author

    Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.  Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

    You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.  Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.

    When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.