Manufacturing activity contracts in Germany and France

Germany-s manufacturing fell back into contraction for the first time since last two years as the PMI (Purchasing Managers Index) dropped to 49.1 in October compared to 50.3 in September.Germany-s manufacturing activity dropped for last 6 consecutive months. This is a clear contraction in manufacturing activity as any reading lower than 50 indicates contraction.

At the same time,France-s manufacturing activity continues to contact for the last month as well. Its PMI reading rose marginally to 48.5 in October compared to 48.2 in September. Both the readings are well below 50, which indicates contraction. Italy-s manufacturing activity dropped sharply as the PMI dropped to 43.3 in October compared to 48.3 in September. This isItaly-s lowest reading in last two and half years.

These data shows that manufacturing activity in all the three biggest euro zone economies dropped in October which increases the possibility of another slowdown or may be recession in the worst case. Now European leaders have to resolve the current euro zone debt crisis as soon as possible to get the growth momentum back in the euro zone economy.