EuroCrisis: Europe Heads to Depression

By Roger Baettig | November 23 2012 9:32 AM

Reuters

The chairman of the Norwegian Nobel Committee accepted the Nobel Peace Prize on Monday on behalf of the European Union.

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The eurozone economy is headed for its weakest Quarter since Q-1 of Y 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Service sector firms like banks and hotels that comprise the bulk of the economy fared particularly badly this month, and laid off staff at a faster pace.

While the monthly rate of decline that manufacturers reported eased far more than economists anticipated, Markit’s latest Purchasing Managers’ Indexes, PMIs, pointed to little change overall for a recession-hit eurozone this month.

The flash service sector PMI fell to 45.7 this month, its lowest reading since July 2009, the survey showed Thursday, failing to meet the expectations of economists who thought it would hold at October’s 46.0.

It has been stuck below the 50 mark that divides growth and contraction for 10 months running, and survey compiler Markit said it was too soon to say if this marked the low.

With more austerity on the way, and a reminder of the continuing sovereign debt crisis in this week’s failure of lenders to agree more aid for Greece, prospects for next year look grim.

The concern about the outlook is getting worse as we move towards the end of the year, and German companies have become more pessimistic about the year ahead.

If the domestic economy of Germany, the largest eurozone nation, is weakening, then that augurs poorly for the rest of the region, especially as there’s little trade picking up outside the region.

The PMIs were consistent with the economy shrinking around 0.5% in this Quarter, Markit said.

That would be the sharpest contraction since Q-1 of Y 2009.

Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.