Manufacturing AUTOMATION

Eurozone economy cools amid stock market turmoil

February 21, 2018
By Pan Pylas The Associated Press

Feb. 21, 2018 – There are signs that the turmoil in financial markets at the start of February had a negative impact — albeit a short-term one — on the fast-growing 19-country eurozone economy.

A closely monitored survey of the private sector found activity cooling during the month but still remaining near levels not seen since before the global financial crisis over a decade ago.

In its monthly survey, financial information firm IHS Markit found that its main gauge of business activity across manufacturing and services – the so-called purchasing managers’ index – slipped to 57.5 points in February from the previous month’s 12-year high of 58.8.

The survey, which informs the European Central Bank’s thinking when it comes to setting policy, has been one of the main indicators showing the strengthening recovery across the countries using the euro currency. Anything above 50 indicates growth.


The decline is not causing much alarm, not least because the start of February was marked by a massive retreat in global stock markets as investors around the world, particularly in the United States, took fright at the prospect of rapid rises in interest rates. Markets have since steadied, a development that’s likely to ease concerns in business of a more protracted and debilitating drop.

“The abrupt end of the long period of nonchalance on the financial markets appears to have also put a damper on the euphoric mood in the eurozone economy,” said Christoph Weil, senior economist at Commerzbank. “But today’s data do not signal an end to the economic upswing in the eurozone.”

In fact, the eurozone is enjoying particularly robust and broad-based economic growth that is raising speculation that the European Central Bank will start to unwind its crisis-era measures faster than expected.

Chris Williamson, IHS Markit’s chief business economist, thinks the region could be headed for quarterly growth of 0.9 per cent in the first three months of the year, which would equate to annualized growth – the preferred measure in the United States – not far short of 4 per cent. That’s a strong level and would likely prompt further big declines in the region’s still-high unemployment rates. In the last three months of 2017, the eurozone economy grew by a healthy quarterly rate of 0.6 per cent.

“The rate of expansion remains impressive, putting the region on course for its best quarter for almost 12 years,” he said.

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