The manufacturing sector is contracting across Europe, if the latest PMIs are correct. The indices, which measure activity in various sectors through surveys with purchasing managers, are set such that a value of 50 indicates no change; less than 50 shows contraction; and more than 50 shows growth. With that in mind, these numbers do not look good:
- Spain: dropped to 44.2 in March, from 46.8 in the previous month.
- France: fell to a seven-month low of 44.5, from February’s mark of 45.8.
- Italy: inched up to a three-month high of 44.0, from 43.9 in February.
- Eurozone overall: 46.8, down from 47.9 in February… fell to reach a three-month low and has now remained below the neutral 50.0 mark since August 2011.
The Eurozone's history is stark:
But the most stunning chart is the one which shows the recent history of manufacturing across Europe. It isn't good:
The best possible explanation for this would be that, coming off the back of the great recession and in the midst of a continent wide crisis, Europe is also experiencing a sectoral shift, pushing people out of manufacturing work and into other sectors of the economy. That way, an end is in sight – and it could even be an improvement on where the continent was before.
Unfortunately, that doesn't seem likely. Even Germany is seeing a contraction in manufacturing, and that's hardly a nation we commonly think of as needing a rebalancing away from its great strength. Instead, it just reinforces that the European crisis, even as eyes are focused on Cyprus, is hitting the entire continent. There are still some unbearable differences between nations – the German youth unemployment rate is 7.7 per cent compared to a Greek rate of 58.4 per cent – but if a rising tide floats all boats, then Europe is trapped in a whirlpool, and the fleet's getting wrecked.