Eurozone remains in the grip of recession

The tale of two economies continues to haunt the Eurozone. Manufacturing activity is just managing to keep a positive hold in Germany, but still falling into negative territory elsewhere. There are no signs of the Eurozone emerging from the grip of recession anytime soon. Germany is just about the only bright hope with PMI manufacturing activity rising to 50.3, just keeping a toe-hold in positive growth. But elsewhere the picture remains grim. Spain manufacturing perceptions recovered a little but still remain subsumed in a contractionary vein.  The French manufacturing economy remains stuck in a deep rut. Italy manufacturing sentiment is sinking again. At least there were some brighter signs in the Greek economy with the fall in new orders slowing and manufacturing confidence picking up a little from deeply weak levels. With the overall Eurozone manufacturing PMI stuck at 47.9 in February, the outlook remains bleak for any hope of near term economic recovery.

The picture remains very clear on the policy front. With so much potential demand being sucked out by Eurozone-wide fiscal austerity, it’s up to the ECB to keep policy on very easy settings for  long while. The odds are the ECB will have to cut rates again as soon as the next policy meeting. The bias remains firmly pointed towards more easing, more monetary stimulus and the need for a lower euro. It’s a question of all hands to the monetary pumps now.

Highlights

GERMAN FEB FINAL MANUFACTURING PMI 50.3, HIGHEST SINCE JAN 2012 (FLASH 50.1 JAN FINAL 49.8)

FRENCH FEB FINAL MANUFACTURING PMI RISES TO 43.9 (FLASH 43.6, JAN FINAL 42.9)

ITALY FEB MANUFACTURING PMI FALLS MORE THAN EXPECTED, TO 45.8, LOWEST IN 3 MONTHS (JAN 47.8, F'CAST 47.5)

SPAIN FEBRUARY MANUFACTURING PMI RISES TO 46.8, HIGHEST SINCE JUNE 2011, FROM 46.1 IN JANUARY