Eurozone Recession Worsens Through 1st Quarter

Markit Eurozone Manu PMI March 2013

European manufacturing ebbs further in March | Reuters.

Euro-Area Unemployment Rises to Record 12% Amid Slump – Bloomberg.

Euro-Area Manufacturing Output Contracts Less Than Estimated – Bloomberg.

Euro Zone Hits New Jobless Record –

Despite all of the happy talk emanating from Brussels and repeated by the mainstream media, Europe is nowhere near a recovery.  In fact, figures show that the Eurozone recession continues to deepen in contradiction to the consensus of economists who see growth right around the corner later in the year.

Eurozone unemployment hit a record of 12% in February with January’s 11.9% initial figure being revised upward:

Eurozone Unemployment 03.2013

Rising unemployment will continue to sap demand resulting in persistent Eurozone economic weakness.

Germany was formerly the only bright spot in Europe, but it is feeling the effects of weak demand from its southern neighbors.  German manufacturing PMI dropped below 50 in March indicating contraction:

Markit Eurozone Components Manu PMI March 2013

Indeed, only France saw an increase in PMI in March, and it is still well within contractionary range.

All of this was viewed as good news by the investment community as the ongoing weakness in the Eurozone may push the ECB to cut rates a quarter point at its next meeting:

Eurostoxx 600 04.02.2013

Just like you shouldn’t fight the Fed, you should probably not fight the ECB either.


2 thoughts on “Eurozone Recession Worsens Through 1st Quarter

  1. Do you have any analysis of how the European financial system is connected to the US? A couple of years ago, John Mauldin did a piece that showed that the direct credit exposure was small, but the notional CDS risk was about 50% of the total sovereign debt outstanding. I haven’t seen anything else on this topic since. I am trying to understand the spillover effects of Europe to the US once something major breaks.


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