Global Recession Roundup

Global Manufacturing PMI Signals Stagnation in February

The word of the day is “stagnation”.

According to Markit, German manufacturing is at a 15-month low; Eurozone manufacturing is at a 12-month low; US production is weakest since October 2013; Chinese manufacturing has some of the worst readings since 2009.

Our stagnation roundup starts with a summary: Global Manufacturing PMI Signals Stagnation in February.

February saw the growth rate of global manufacturing output slow to near-stagnation. Inflows of new business rose only marginally, while new export orders and employment both contracted. The J.P.Morgan Global Manufacturing PMI™posted 50.0 in February, a 39-month low and identical to the no-change level that signals stagnation. The downturn in emerging nations accelerated to its fastest since last September, while growth across the developed markets slowed to a 33-month low.

Global Manufacturing Summary

Global Manufacturing1

Eurozone PMI Falls to 12-Month Low in February

In Europe we see a divergence between the core and the periphery as the Eurozone PMI Falls to 12-Month Low.

Key Points

Eurozone Manufacturing PMI at 51.2 in February

Slower growth of production, new orders, export business and employment

France and Germany hover close to stagnation mark

Greece slips back into contraction

Global Manufacturing2

Don’t expect Eurozone growth if Germany and France slip into contraction. By the way please note Spain, allegedly mired in deflation.

Germany Manufacturing PMI Drops to 15-Month Low

Diving into details of the Eurozone weakness we see Germany Manufacturing PMI Drops to 15-Month Low.

Key Points

PMI dropped from January’s 52.3 to a 15-month low of 50.5.

Production rises at slowest pace since December 2014.

Employment falls for first time in one-and-a-half years.

Steepest drop in input costs since financial crisis.

Comments

Commenting on the final Markit/BME Germany Manufacturing PMI ®survey data, Oliver Kolodseike, economist at Markit and author of the report said: “It looks as if the German manufacturing engine has run out of steam, with the headline PMI falling to a 15-month low in February. Faced with weak domestic and foreign demand and slow production growth, manufacturers reduced their workforce numbers for the first time in one-and-a-half years. Moreover, with backlogs of work rising at the weakest rate since last July, there is certainly a danger that companies will continue to shed staff in coming months.

“Deflationary pressures meanwhile intensified, as low energy and raw material prices led to the steepest drop in input costs since the financial crisis. Although companies were able to reduce their selling prices to the greatest extent since the summer of 2013, demand remained subdued, as highlighted by the smallest gain in new business since last July. “Overall, the data are a serious blow to hopes that any meaningful growth in Germany’s manufacturing sector would resume at the beginning of the year.”