European services and manufacturing growth weakened more than economists forecast to the slowest pace in almost two years, adding to signs the euro-region recovery is losing momentum as the debt crisis persists.Exclude Germany and the Eurozone is contracting already. Expect to see an overall contraction next month.
A composite index based on a survey of euro-area purchasing managers in both industries fell to 50.8 in July from 53.3 in June, London-based Markit Economics said today. That’s the lowest since August 2009. Economists forecast a drop to 52.6, the median of 17 estimates in a Bloomberg News survey showed. A reading above 50 indicates growth.
“We expect the euro-region recovery to lose momentum over the coming months,” said David Kohl, deputy chief economist at Julius Baer Group in Frankfurt. “The German boom is mainly export driven and the global economy is also cooling. The second half will be significantly weaker overall.”
Also note that China PMI in Contraction; IMF Wants Further China Tightening to Combat Inflation
Whatever the EU comes up with today will not fix the Eurozone structural problems or the US deficit problem. Nor will it address the problems of an overheating Chinese economy.
The market however always seems to appreciate news of another bailout. One day that will not be the case.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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