Euro zone slump deepens and China still wilts

Thu Sep 20, 2012 7:10am EDT
 
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By Andy Bruce

LONDON (Reuters) - Aggressive new policy from the European Central Bank has so far failed to boost ailing euro zone business, according to surveys that showed a widening chasm between sickly France and a more resilient Germany.

Thursday's purchasing managers indexes (PMIs), which survey thousands of companies worldwide every month, also showed Chinese factory activity wilted for an 11th month in September, as Europe's troubles continued to hit Asian exporters.

That looks unlikely to improve soon.

While the downturn in Europe's largest economy, Germany, eased by a surprising amount this month, French firms fell deeper into the mire in September - and at a far faster rate than expected.

A good indicator of economic performance, the composite euro zone PMI fell to 45.9 in September from 46.3 in August.

Below 50 denotes contraction and survey compiler Markit said the surveys were consistent with a roughly 0.6 percent economic contraction in the third quarter.

There was little sign that the ECB's plan to buy the debt of troubled euro zone states, announced on September 6, has boosted confidence among service sector firms - at least so far.

"The fall in the PMI is another reminder that the ECB's new asset purchase program is not an answer to all of the region's problems," said Ben May, European economist at Capital Economics, in a research note.   Continued...

 
A man searches for food inside a garbage, in front of a One Euro shop in central Athens in this June 24, 2012 file photo.REUTERS/Pascal Rossignol/Files.