The economy is getting worse.
We just got a big slew of PMI numbers, and a few things are clear in Europe.
- The periphery is hurting badly. What countries like Spain, Italy, and Greece so desperately need is growth, and they’re not getting any of it. This not only is bad from a societal standpoint (as the jobs picture gets worse and worse) but it makes sovereign debt dynamics worse, as the GDP part of debt-to-GDP shrinks.
- Core is not doing so hot either. The French number showed a particularly steep drop. Germany has dropped below 50 as well.
- Surprisingly, the only real “bright spot” was Ireland, which saw a big pickup in New Orders and exports. Somehow it continues to avoid the curse of the rest of the PIIGS.
This chart from Markit summarizes the situation up nicely, as it shows the core of Europe rapidly meeting the periphery in the recession zone.
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