Europe facing recession as manufacturing and services retract

The euro zone is entering worrying times as during the second quarter, the economy shrank by 0.2 percent even though figures from the third quarter have not yet been released.

During this week, stocks have been tumbling as the euro has also lost value. This situation has been made worse by the fact that several companies have announced warning signals with bad profits being unveiled.

It was widespread panic across European stock exchanges as Germany’s DAX index slid as much as 10 percent at one point Friday, whilst the FTSE 100 fell as much as 8 percent before finishing down 5 percent.

The euro zone does seem as though it is about to enter a recession, as the decline is currently larger than expected and the decline in the purchasing managers index shows that the pessimism is greater than expected.

The euro has fallen as low as $1.2494, and is at is lowest point since April 2006, whilst the pound has dropped by 8 cents against the dollar.

The manufacturing sector is now firmly in recession as it is as its lowest level in over 11 years.

Car manufacturers are reporting a slowdown and are responding by reducing production, as Volvo, Daimler and Fiat have all announced profit warnings over the past week.

Story link: Europe facing recession as manufacturing and services retract