What's going on?
Flash data released on Wednesday showed eurozone manufacturers continuing to struggle – while American industry may be having its worst month in a decade.
What does this mean?
Factories in the 19 euro-using countries of the European Union are having a difficult year – their output’s now been shrinking for four months in a row, while weak demand has seen new orders declining for eight. And that’s starting to hit jobs, too: staffing levels are being cut for the first time in almost five years. The eurozone’s crucial services sector is still growing, but at a slower rate than before – putting the economy on track for growth of just 0.2% this quarter, even worse than the paltry 0.4% recorded in the first three months of 2019 (tweet this).
Things weren’t much better in the US, meanwhile. Both the manufacturing and services sectors managed to grow, just – but surprisingly sluggish data suggests that the American economy overall is growing at its slowest rate in three years. The reason for all this doom and gloom? Take a wild guess…
Why should I care?
For markets: Europe is gambling on growth.
Minutes from a recent meeting of the European Central Bank suggest that it’s still hoping the eurozone economy will pick up somewhat in the second half of 2019. It’s due to dish out a fresh round of cheap loans to Europe’s banks in September in an attempt to encourage more lending to European businesses – but that may come too late for some. Trading in shares of French supermarket giant Casino were suspended on Thursday ahead of a likely restructuring of its expensive existing debts.
Zooming out: Everybody hurts.
Crucial export orders for Japanese manufactured goods are falling at their fastest pace in four months, pushing Japan’s factories back into contraction. The ongoing US-China trade war (good guess, by the way) and resultant drop in demand also led to economic growth downgrades this week in Singapore, Thailand, and Australia – and China itself isn’t immune either.