Manufacturing data

U.K. Manufacturing Sector growth slows in September, prompting manufacturers to lay off workers, against backdrop of uncertain global outlook. Eurozone manufacturing also lost momentum and output from Chinese factories continued to fall…

Powered by article titled “UK manufacturing sector suffers job losses for first time in two years” was written by Julia Kollewe and Katie Allen, for on Thursday 1st October 2015 18.52 UTC

Tough export markets and weaker consumer spending continued to take their toll on UK factories last month, prompting the first job losses for the sector in more than two years, according to a survey that echoed signs of manufacturing weakness around the world.

The performance at UK factories was lacklustre in September, when growth slipped to a three-month low. Against the backdrop of warnings about the uncertain outlook for global growth, eurozone manufacturing also lost momentum and output from Chinese factories continued to fall.

For the UK, the first snapshot of manufacturing performance in September continued a downbeat trend. The key measure of factory activity slipped back to within a whisker of June’s two-month low, according to the Markit/CIPS manufacturing PMI report.

At 51.5 the main balance was still above the 50-mark that separates growth from contraction, but it marked a slowdown from 51.6 in August and economists said it would further convince policymakers at the Bank of England to hold off from raising interest rates from their current record low of 0.5%.

The survey reported manufacturing job losses for the first time since April 2013.

“Job cuts send a signal that manufacturers are becoming more cautious about the future, which may lead to a further scaling back of production at some firms in coming months,” said Rob Dobson, senior economist at Markit.

“The ongoing malaise of the manufacturing sector will add to broader growth worries and supports dovish calls for a first rise in interest rates to be held off until the industry returns to a firmer footing.”

The manufacturing sector has been growing for 30 months, according to the survey, but the pace has slowed since the start of the summer. While output growth improved slightly last month, growth in new orders tailed off to the weakest rate seen this year.

Manufacturing growth
Manufacturing growth in the UK. Illustration: Markit/CIPS

Manufacturing growth across the eurozone slowed to a five-month low, according to separate reports from Markit. Its factory PMI for the currency bloc slipped to 52.0 from 52.3 in August. Activity slowed in Germany and Spain, while the French factory sector is expanding again.

The slump at China’s factories also continued, but there were some signs of stabilisation. The Caixin China general manufacturing PMI found that production was still falling, forcing firms to lay off more people. The official manufacturing PMI published by the Beijing government also showed that manufacturing was still contracting, but at a slower rate.

Economists drew links between China’s downturn and the pressures on UK manufacturers already grappling with a relatively strong pound, which makes their goods more expensive to overseas buyers.

“Manufacturing continues to face headwinds from weaker demand from China and emerging markets – where the UK sends up to 15% of its exports – in addition to strength in sterling which is up 15% in effective terms compared to its February 2013 low,” said Kallum Pickering, senior UK economist at Berenberg bank.

He saw little prospect of manufacturing having boosted the wider economy in recent months but was optimistic EU and US demand would help the sector.

“For now, UK manufacturers might see export demand dwindling as the developing world struggles with slowing Chinese demand and weak commodity prices, but in the medium term rising demand from the UK’s biggest and closest trading partners should help underpin a recovery in UK manufacturing,” Pickering added.

Separate UK figures on productivity also pointed to recent weakness in the manufacturing sector. There was a 0.5% fall in factory output per hour in the second quarter, bucking the improving trend for the wider economy, according to the Office for National Statistics (ONS).

Across all sectors, productivity grew by 0.9% from the first to the second quarter on an output per hour measure. That took productivity to the highest level on record, but it was still 15% below where it would have been had pre-downturn trends continued, the ONS said.

Zach Witton, a deputy chief economist at EEF, the manufacturers’ organisation, said: “Today’s data suggests the challenging export environment and weak demand for investment goods in the oil and gas sector has started to take a toll on business confidence.” © Guardian News & Media Limited 2010

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Upbeat mood in Britain contrasts with pessimistic eurozone surveys. Fears of recession in France grow. Eurozone composite PMI remains in expansion territory above the 50 mark at 51.5, but declines from October’s level of 51.9…


Powered by article titled “UK manufacturing expands at fastest rate since 1995″ was written by Heather Stewart, for on Thursday 21st November 2013 13.32 UTC

Britain’s manufacturing sector is expanding at its fastest pace for 18 years as new orders pour in, according to a new survey, rekindling hopes for a rebalancing of the economy.

The Confederation of British Industry’s monthly industrial trends survey shows manufacturing orders and output both at their highest level since 1995.

The CBI said that 36% of firms reported their order books were above normal, with 25% saying they were below normal. The resulting balance of +11% was the strongest since March 1995. Similarly, the positive balance for firms’ level of output, at +29%, was the strongest since January 1995.

Stephen Gifford, the CBI’s director of economics, said: “This new evidence shows encouraging signs of a broadening and deepening recovery in the manufacturing sector. Manufacturers finally seem to be feeling the benefit of growing confidence and spending within the UK and globally.”

The coalition will be encouraged to see signs of a revival in British industry, after fears that the economic recovery has so far been too reliant on consumer spending and an upturn in the housing market.

The chancellor of the exchequer, George Osborne, has said he would like to see a “march of the makers”, helping to double exports by the end of the decade, so that Britain can “pay its way in the world”.

Business surveys have been pointing to a revival in manufacturing for some time, but it has only recently begun to be reflected in official figures, which showed a 0.9% increase in output from the sector in the third quarter of 2013, driven primarily by the success of carmakers. However, output from manufacturing remains more than 8% below its peak before the financial crisis.

News of the upbeat mood among manufacturers in the UK contrasts with more pessimistic surveys from the eurozone where the so-called “flash PMIs” suggest that the economic recovery is petering out in several countries, including France.

While the composite PMI for the eurozone remains above the 50 mark at 51.5, this is a decline from October’s level of 51.9, suggesting that while the eurozone economy as a whole has not slipped back into recession, the pace of growth appears to have slowed.

Chris Williamson, of data provider Markit, which compiles the survey, said: “The fall in the PMI for a second successive month suggests that the European Central Bank was correct to cut interest rates to a record low at its last meeting, and the further loss of growth momentum will raise calls for policy makers to do more to prevent the eurozone from slipping back into another recession.” © Guardian News & Media Limited 2010

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Strong export sales help UK manufacturing sector stabilize after slump earlier in year, Cips/Markit survey shows. The reading follows a 0.3% rise in GDP in the first quarter, which was largely attributed to the strength of the services industry…


Powered by article titled “UK manufacturing shows signs of recovery – but firms remain cautious” was written by Phillip Inman, economics correspondent, for The Guardian on Wednesday 1st May 2013 10.23 UTC

A rebound in manufacturing appears to be under way after a disastrous start to the year, according to a survey of the sector in April.

Strong sales of consumer goods to North America, the Middle East, Latin America and Australia helped the sector stabilise after a slump in January and February.

Ministers will cheer a recovery in the sector, especially after the 0.3% rise in GDP in the first three months of the year, which was largely attributed to the strength of the services industry.

An improved outlook for manufacturing, which was a drag on output in the first quarter, could allow GDP to maintain a more consistent and positive path over the coming months.

The consumer goods industry led the way, with companies producing machine tools not far behind, as the sector showed a modest rise in production amid a widespread clearance of stock left over from the slump earlier in the year.

Much of the slump is attributed to bad weather at the beginning of the year, though renewed uncertainty in the eurozone and a persistent lack of bank lending for investment also played a part.

Althouth eurozone fears have eased, the situation remains febrile and persistenly tight bank lendingis making some analysts cautious about a possible upturn.

The Cips/Markit survey showed the sector continued to shrink last month but by only a small margin. At 49.8, the manufacturing purchasing manager's index (PMI) continued to be below the 50 figure that divides growth from contraction, though it fed expectations of a return to growth in May.

Lee Hopley, chief economist at EEF, the manufacturers' trade body, said the survey was a mildly encouraging start to the second quarter.

"While still not in positive territory overall, the data indicates a vital revival in export orders with demand from markets in the Americas and Middle East compensating for the continued weakness in Europe. This is a especially positive as the UK sorely needs an improvement in trade if we are to make faster progress on rebalancing growth."

Markit said the eurozone continued to drag on export sales, but a shift to markets further afield was making up some of the difference.

In contrast to the improving output figures, the sector shed jobs for the third straight month and most firms said they remained cautious about a possible sustained recovery.

Rob Dobson, an economist at Markit, said: "Following the poor start to the year, when manufacturing acted as a drag on the economy in the opening quarter, it is welcome to see the sector showing signs of stabilising in April. With forward-looking indicators such as new orders and the demand-to-inventory ratio also ticking higher, the sector should at least be less of a drag on broader GDP growth in the second quarter.

"Manufacturers report that the domestic market is just about holding its head above water, but was still a key cause of disappointingly weak demand, while a solid improvement in new export orders was the real surprise."

The figures followed a disappointing survey of Chinese manufacturing that showed a dip earlier this year turning into a more prolonged slowdown.

The official manufacturing PMI, composed for the statistics bureau by the China Federation of Logistics and Purchasing, fell from 50.9 in March to 50.6 last month.

A Capital Economics analyst, Mark Williams, said: "At face value that is not too big a drop. But April is normally one of the strongest months of the year, particularly for output. The fact that the output component fell at all – from March's 52.7 to 52.6 – is therefore a concern," he said. "If the usual pattern holds, output will weaken in coming months." © Guardian News & Media Limited 2010

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EC denies u-turn on austerity. Euro-zone Composite PMI registers another month of contraction. Alarm as German service and manufacturing sectors both contract, but French PMI better. US new home sales rise less than expected…


Powered by article titled “Germany’s private sector shrinks as eurozone decline continues – as it happened” was written by Graeme Wearden and Nick Fletcher, for on Tuesday 23rd April 2013 11.47 UTC

5.50pm BST

Spain’s Rajoy hints at further tax rises

Spanish prime minister Mariano Rajoy has opened the way to further tax rises and spending cuts, Reuters has reported.

The country will publish updated economic forecasts and a new programme of reforms on Friday and Rajoy said in a press conference:

We will not announce spending cuts like those we put out last year although we will likely need to review some entries in the budget.

We don't want to increase value added tax or income tax this year, but we also depend on the growth rate and the deficit-cutting path for the next years.

He also wants to introduce measures to promote growth.

And on that it's time to close up for the evening. Thanks for all your comments and we'll be back again tomorrow to follow all the latest developments.

5.32pm BST

European markets close sharply higher

It's been a buoyant day for European stock markets, with traders pointing to a number of factors for the gains. For a start, the poor manufacturing data, particularly from Germany, encouraged the belief that the European Central Bank could cut interest rates, possibly as soon as next week.

EC president Jose Manuel Barroso's comments that austerity may have reached the limits of public acceptance - albeit running into a dispute about what he actuallly meant – also encouraged investors.

On top of that came some good corporate results from the likes of chipmaker Arm in the UK and Netflix in the US. So here's the scores on the doors:

• The FTSE 100 finished 125.50 points or 2% higher at 6406.12, its biggest one day rise since 2 January

• Germany's Dax jumped 2.41%

• France's Cac climbed 3.58%

• Italy's FTSE MIB added 2.93%

• Spain's Ibex closed up 3.26%

Meanwhile the Dow Jones Industrial Average is currently up just over 1%.

The prospect of an ECB cut sent the euro as low as .2971, with the currency currently down 0.44% at .3009. Spanish bond yields dipped to their lowest level since November 2012, encouraged by a positive treasury bill auction. Hopes of a resolution to the impasse since the Italian elections helped push the country's yields below 4% to 3.937% at the moment.

Updated at 5.42pm BST

5.17pm BST

Italy edges closer to new prime minister

Italy could potentially have a new government in place by the weekend if president Giorgio Napolitano's talks aimed at naming a prime minister succeed.

But while there is some optimism a new government can be formed quickly, there may still be stumbling blocks. The favourite at the moment to step in and head a coalition government of the rival centre-left and centre-right parties is former prime minister Giuliano Amato.

But the Northern League party said it would not be in any government headed by Amato or technocrat Mario Monti.

And Silvio Berlusconi's centre-right People of Freedo party said it had no objections to another potential candidate for prime minister, Matteo Renzi, the centre-left mayor of Florence. However Reuters reported that Renzi had played down the possibility:
It's the hypothesis which is most surprising and least probable, I don't think it's on the table.

Former Italian prime minister Giuliano Amato who is one of the two favorites to lead the new Italian government. Photograph: Laura Lezza/Getty Images
Former Italian prime minister Giuliano Amato who is one of the two favorites to lead the new Italian government. Photograph: Laura Lezza/Getty Images
..and his rival, the mayor of Florence, Matteo Renzi (centre). Photograph:  EPA/Massimo Percossi
..and his potential rival, the mayor of Florence, Matteo Renzi (centre). Photograph: EPA/Massimo Percossi

4.00pm BST

Spanish economy continues shrinking

Spain's economy shrank by 0.5% in the first three months of the year, continuing the country's recession.

The Bank of Spain blamed the fall on a drop in consumer spending, which was down 0.8% in the quarter. The Bank has forecast the economy will contract by 1.5% this year before returning to growth in late 2014.

As reported earlier, Spain successfully sold €3bn worth of short-term debt at lower yields.

3.10pm BST

Positive US housing figures help lift Wall Street

Some reasonable housing data from the US but more downbeat manufacturing figures.

First, sales of new single family homes rose 1.5% in March to 417,000 after a 7.6% drop in the previous month. This was a little short of forecasts of a rise to 420,000. But sales were up 18.5% year on year, a good indication of how the housing market has been recovering. Annalisa Piazza at Newedge Strategy said:

In a nutshell, the US housing market remains on a moderate upward trend, also supported by falling mortgage rates and less restrictive credit conditions.

But following a worse than expected US purchasing managers index earlier , the Richmond Federal Reserve index showed a contraction in April, down 6 compared to a rise of 3 in March.

None of this has prevented stock markets – in the UK, Europe and the US – from roaring away. In Europe it seems to be the so-bad-it's-good syndrome, with poor figures (from Germany in particular) prompting talk of an interest rate cut from the ECB.

Wall Street has been lifted by a number of reasonable corporate results, including Netflix and Travelers, as well as the housing data.

Updated at 4.04pm BST

2.36pm BST

Italy faces risks to forecasts says central bank official

Italy faces risks to its economic growth forecasts, an official from the country's cental bank has said.

Reuters is reporting Daniele Franco as saying that there were downside risks to the forecasts of a 1.3% decline in GDP in 2013 and a 1.3% rise in 2014.

He added that any new government – which we are still waiting for of course – must avoid any doubts over whether it would respect the 3% of GDP deficit limit.

Meanwhile there is this comment from Eurogroup head Jeroen Dijsselbloem:

Updated at 2.39pm BST

2.06pm BST

US manufacturing shows sluggish growth

US manufacturing grew in April at its slowest pace for six months, with the lates PMI survey coming in below expectations.

The Markit report showed the purchasing managers index fell to 52 from 54.6 in March, less than the forecast 54. It indicates that US manufacturing may be losing its momentum as consumers worry about tax hikes and government spending cuts.

2.00pm BST

Bank of England’s McCafferty positive on UK economy

Meanwhile the newest member of the Bank of England's monetary policy committee has been sounding an optimistic note on the UK economy.

Growth will pick up pace this year, according to Ian McCafferty, who has sought to play down fears the country has slipped into an unprecedented triple-dip recession. My colleague Katie Allen writes:

McCafferty said improving credit conditions, a brighter international outlook and his expectations of a recovery in business investment all made him “hopeful for the UK economy through 2013 and into 2014”.

“Overall, I am hopeful for a modest pickup in growth as some of the negative factors that have made the last couple of years so difficult start to fade, and as levels of confidence, so badly battered by the impact of the euro crisis, start to heal,” he said in a speech at the Coventry and Warwickshire Chamber of Commerce.

Speaking ahead of official GDP data due on Thursday that is expected to show the UK has just escaped a triple-dip recession, McCafferty’s comments gave George Osborne a much needed boost after a difficult 10 days during which he was warned by the IMF’s chief economist, Olivier Blanchard, that he was “playing with fire” by sticking to his strategy of public sector cuts.

1.32pm BST

Germany’s Barthle hits out at Barroso austerity comments

The Barroso comments continue to stir things up. German politician Norbert Barthle has apparently condemned the reported comments from EC president José Manuel Barroso saying Europe's austerity programme had reached the limits of public acceptance:

Updated at 1.37pm BST

1.20pm BST

ECB rate cut talk lifts eurozone government debt

Growing talk of a rate cut by the European Central Bank, perhaps as early as next week, continues to lift eurozone debt.

With Germany's private sector shrinking for the first time in five months, the country's bund futures are moving higher and the 10-year yield is down nearly 1 basis point at 1.215%.

But peripheral debt is also performing well, with Italian yields down 12.5 basis points and Spanish yields 21 basis points lower. The hope of a resolution to the political uncertainty since the inconclusive Italian election was a factor, while in Spain an auction of three-month bonds attracted demand.

Updated at 3.12pm BST

12.47pm BST

Silvio Berlusconi is holding a healthy lead in the Italian opinion polls, according to new data released as president Giorgio Napolitano begins coalition talks.

One poll has Berlusconi's People of Freedom party ahead by 8%.

Alberto Nardelli, Italian political expert, tweets the details:

And with that, I'm handing over to my colleague Nick Fletcher.

Updated at 1.05pm BST

12.30pm BST

EC denies austerity u-turn

A row is brewing in Brussels after the European Commission denied that president José Manuel Barroso pulled a u-turn yesterday when he said that Europe's austerity programme had reached the limits of public acceptance.

The EC has released a full transcript of the comments, made at a think tank event in Brussels. Austerity and growth debate: What President Barroso actually said at the Brussels Think Tank Dialogue.

They confirm that Barroso did state that the current approach to deleveraging Europe's 'unsustainable' debts was nearing its limits: (as we reported yesterday here).

Barroso said:

So while this policy is fundamentally right, I think it has reached its limits in many aspects, because a policy to be successful not only has to be properly designed. It has to have the minimum of political and social support.

And when asked to clarify by our Europe editor, Ian Traynor, Barroso stated that Europe's programme of deficit reduction had to be "complemented by a stronger emphasis on growth and growth measures in the shorter term:

We have been saying this, but we should say it louder and clearer. If not, even if the policy of correction of the deficit is basically correct, we can always discuss the fine-tuning, the rhythm or the pace, but that will not be sustainable politically and socially.

That's pretty clear, thanks.

So, fast-forward to Brussels where an EU spokesman has also just told the assembled Press Pack that Barroso hasn't changed his position:

Really? Ian, for one, isn't convinced:

Neither is the WSJ's Matina Stevis (who moderated Barroso's session). She also argues that backtracking is an blunder:

And Re-Define's Sony Kapoor speculates that Barroso's comment may not have pleased the German government:

11.42am BST

Analysts see little relief for Europe

The continuing fall in Eurozone output this month (see 9.19am) led by Germany's shrinking private sector seconomy, shows that there's no improvement in Europe's woes.

Analysts believe an ECB interest rate cut looks likely, but that probably won't be enough to turn the situation around.

Here's the latest reaction:

Carsten Brzeski of ING:

The eurozone’s economic engine is stuttering…

The weather and, much more important, disappointing Chinese activity, are still having a stranglehold over the German economy.

Kit Juckes of Société Générale:

At the margin, it is good news that we saw the divergence between Germany and France partially unwound, with German data coming out soft.

But the underlying story is that one of the best indicators of what is happening to growth suggests a mild depression continues, getting neither better, nor worse.

There will be debate about whether the ECB will cut rates further, though I doubt that would make any economic difference (except to the very front end of the Euro curve). But the ECB won't be tightening for a very, very long time indeed! Peripheral bond markets continue to rally and that in turn means FX models don't point to any great danger to the Euro, though I still think a weaker currency is needed, and inevitable if I am patient enough.

Richard Driver of Caxton FX:

This is yet more lacklustre data from the eurozone; the pace of contraction in France may be slowing but Germany is the one we are all interested in and the picture there looks very bleak indeed. The chances of a German and pan-European bounce back in Q2 are looking pretty remote right now. 

If the ECB don’t respond by cutting interest rates next month then you have to wonder how bad things have to get before they do bite the bullet. This should keep the euro under the cosh in the coming weeks.

11.20am BST

Cyprus finance minister: we’ll get bailout approved

Cypriot Finance Minister Harris Georgiades speaks to Reuters in an interview in Nicosia April 22, 2013.
Cypriot finance minister, Harris Georgiades, last night. Photograph: ANDREAS MANOLIS/Reuters

Cyprus's finance minister has attempted to calm fears over its bailout by insisting that MPs are certain to approve the deal when it comes to a vote in the coming days.

In an interview with Reuters, finance minister Harris Georgiades argued that the Nicosia parliament has already taken most of the difficult decisions (such as restructuring its banking sector and raising corporation tax)

Georgiades said:

I think parliament will acknowledge there is no alternative at this point.

We don't have a date for this vote yet – except that it is not expected before this Friday.

Georgiades suggested that the current restrictions on cash withdrawals and movement of capital could be eased within a few months.

Asked whether measures would be eased in two, or six months, Georgiades said: "Definitely not six months. I am optimistic we shall be able to proceed much sooner

Georgiades added that Cyprus was in no rush to start selling its gold reserves to raise €400m towards its reform plan, calling the sale:

…not even the most important, or the issue of the greatest magnitude.

Perhaps they're waiting until the gold price has recovered (it's down 0.5% today at ,413 per ounce)

Reuters' full interview is here: Gold sale not a priority – Cyprus finance minister

Updated at 11.20am BST

10.14am BST

In the markets…

German sovereign debt has risen in value this morning, pushing down the yield on its 10-year bonds to a new record low:

The German stock market has fallen 0.4% as traders avoid risk and digest the news that Germany's private sector is contracting.

In France, though, the main market is up 1% on relief that its downturn has eased.

Here's a round-up:

German DAX: down 24 points at 7453, – 0.3%

FTSE 100: up 30 points at 6,311, up 0.5%

French CAC: up 37 points at 3687, +1%

Spanish IBEX: up 84 points at 8112, +1%

Italian FTSE MIB: up 101 at 16123, +0.6%

10.02am BST

UK deficit falls by £300m

Britain managed to slice £300m off its budget deficit last year, according to the latest Public Finances figures.

The Office for National Statistics reported that the Public Sector Net Borrowing requirement (when various one-off items and financial interventions are excluded) came in at £120.6bn for the 2012-13 financial year.

That's a small improvement on the £120.9bn in the previous year.

Last year's deficit was equal to 5.57% of GDP, according to the ONS's figures. The UK's total national debt rose to £1.1858trn, or 75.4% of GDP (when the cost of financial sector interventions is ignored).

City economists aren't terribly impressed:

Howard Archer of IHS:

Some modestly good news for the Chancellor as the public deficit for 2012/13 came in marginally below the 2011/12 outturn and slightly less than the OBR had estimated in the budget.

Mind you the rate of improvement in 2012/13 makes a snail look fast, but at least the Chancellor can say the finances moved in the right direction!

9.47am BST

Here's more reaction to today's PMI data:

9.43am BST

Sweden’s unemployment rate rises

Sweden's jobless rate has jumped,in another signal that the European economy is struggling.

The unemployment rate in Sweden rose to 8.8% in March, up from 8.5% the previous month. Young people bore the brunt of the labour market, with the unemployment rate for people aged 15-24 rising to 28.1%, from 25.15 a year ago.

Statistics Sweden said this was due to an increase in the number of full-time students who are now full-time student job seekers, unable to find employment.

At 8.8%, Sweden's overall unemployment rate is rather lower than the 12% recorded in the eurozone last month.

9.31am BST

ECB rate cut spied

Economist Howard Archer of IHS reckons that the ECB is likely to cut interest rates, perhaps as early as next week, following today's data:

The ECB indicated at its April policy meeting that it is increasingly open to taking interest rates down from 0.75% to 0.50%, and latest comments by senior ECB policymakers indicate that that an interest rate cut could well occur if Eurozone economic activity continues to disappoint.

The April purchasing managers surveys certainly seem to fit the bill for an ECB interest rate cut and we believe there is a strong chance that the ECB will act as soon as its 2 May meeting. If the ECB does hold fire on interest rates at its May meeting next week, this looks increasingly likely to be only delaying the inevitable.

Hard to believe a quarter-point rate cut would really bring much cheer to the eurozone, though.

9.19am BST

Eurozone’s private sector shrinks again as Germany suffers

Germany has been dragged deeper into Europe's economic crisis, as the eurozone's private sector continues to contract at the same rate as in March.

That's the broad message from today's PMI data, with France's better-than-expected performance overshadowed by the deterioration in Germany.

Here's Markit's overall PMI data (combining the data from France and Germany).

Eurozone service sector PMI: 46.6, up from March's 46.4

Eurozone manufacturing PMI: 46.5, down from March's 46.8

Eurozone composite PMI: 46.5, marching March's 46.5.

Eurozone flash PMI vs GDP, to April 2013
Photograph: Markit

As Markit explained, the region's two largest member states are showing "divergent trends".

While France saw the rates of decline in both business activity and new business ease sharply to the slowest for four and eight months respectively, Germany saw both activity and new business fall at the steepest rates for six months.

The drop in German activity was also notable in being the first since last November.

Elsewhere across the region output fell at the slowest rate for three months in April, though the rate of loss of new business remained marked.

And in further gloom, firms cut payroll numbers (ie, the number of people they employ) for the 16th month in a row.

8.59am BST

Euro slides as traders anticipate ECB action

The euro has fallen since Germany's poor PMI data hit the wires, down amost one cent against the US dollar at .298.

The European Central Bank may respond with an early cut in interest rates, as Owen Callan of Danske Bank Markets explains:

8.56am BST

Key event

This graph from Markit, of Geman PMI data versus economic growth, shows why today's weak data (see 8.38am) could herald a contraction in GDP this quarter.

German PMI vs GDP, to April 2013
Photograph: Markit

8.45am BST

Germany hit by crisis in Southern Europe

Tim Moore, senior economist at Markit, warned that Germany's private sector has been weaking in recent months – leading to today's surprise fall in output (see 8.38am).

The data suggests the German economy could shrink this quarter, Moore explained. He added that German industry is clearly suffering from the crisis in the eurozone periphery:

Weaker demand was attributed to subdued business confidence across the euro area, with clients cutting spending amid concerns about the economic outlook for southern Europe.

In the manufacturing sector, there were also reports that destocking efforts had led to reduced production requirements.

Updated at 8.45am BST

8.38am BST

Surprise contraction in German private sector

Germany's private sector is shrinking for the first time since last November, with its services and manufacturing sectors both reporting much weaker than expected PMI data.

Both readings came in below the 50-point mark — showing a contraction in Europe's largest economy.

German service sector PMI: 49.2, down from March's 50.9.

German manufacturing PMI: 47.9, down from March's 49.

German composite PMI: 48.8, down from 50.6 in March

That is rather alarming news for Angela Merkel's government… More to follow.


8.30am BST

China’s weak PMIs hits Shanghai shares

The weak Chinese PMI data released overnight sent shares sliding, with the Shanghai composite index closing 2.6% lower.

The data has reinforced fears that the Chinese economy is slowing.

CNBC has the full details: here's a flavour:

China's flash HSBC PMI fell to a two-month low of 50.5 in April from 51.6 in March – compared with expectations for a fall to 51.5. A reading above 50 indicates expanding activity and one below 50 signals contraction.

"It's a big miss. Confidence in the outlook for China has really diminished, particularly after first quarter growth data," said Tim Condon, head of research for Asia at ING. "People are now reforming their views on economy. The new view is that growth will be stagnant," he added.

Updated at 11.30am BST

8.22am BST

France's private sector has suffered a bruising two years now, as this graph from today's PMI data shows:

French PMI vs GDP, April 2013
Photograph: Markit

The French business people interviewed by Markit were more optimistic than in March, predicting a "modest expansion of activity" over the next 12 months:

Panellists expressed hope that market conditions will improve, although there remained concerns over the generally poor economic climate.

The full release is here (pdf)

Updated at 8.22am BST

8.14am BST

Europe's stock markets have opened a little higher on the back of the French PMI data (FTSE 100 is up 10 points). There's relief that the downturn in Europe's second-largest economy isn't worse.

But as Re-Define's Sony Kapoor points out, France's private sector is still shrinking:

Updated at 8.15am BST

8.07am BST

French PMI better than expected

Just in: France's manufacturing and service sectors are still shrinking — but the pace of the downturn is slowing.

French manufacturing PMI: 44.4 in April, up from 44.0 in March. An eight-month high.

French services PMI: 44.1, up from 41.3 in March. A four-month high.

Markit chief economist Chris Williamson told Reuters that the worst may be over for French firms:

They're seeing obviously very weak demand and thinking it can't get any worse, surely it will get better… Policymakers won't allow a further collapse.

Updated at 8.18am BST

7.58am BST

How PMI surveys work

A quick explainer of how the PMI data is calculated, and what it shows:

• Markit, the financial data firm, interviews purchasing managers across the private sector to find if their business conditions are better, worse, or the same than last month.

• That information is used to generate the PMI for each sector.

• A PMI of 50 means the sector was flat — anything higher shows growth, while a PMI below 50 indicates that economic activity fell.

And this month, economists predict that the overall composite eurozone PMI (combining services and manufacturing) will come in at 46.5, the same as March. That would mean Europe's private sector is continuing to contract.

7.48am BST

PMI data to show state of Europe’s economy

Workers assembling air conditioners at a factory of Gree Electric Appliances in Wuhan in central China's Hubei province 18 April 2013.
Workers assembling air conditioners at a factory of Gree Electric Appliances in the Hubei province of central China – Chinese PMI data this morning was weaker than expected. Photograph: SHEPHERD ZHOU

Good morning, and welcome to our rolling coverage of the Eurozone financial crisis, and other key events across the world economy.

It's a big day for data. Purchasing Managers Index reports from across the eurozone will show how manufacturers and service sector companies are performing this month.

Economists expect the PMIs to confirm that the eurozone's private sector is still shrinking, as many European countries struggle to come out of recession

That would put more pressure on the European Central Bank to cut interest rates, or even consider more unconventional measures.

The data will also provide fresh fodder for the raging debate on whether the eurozone should slow the pace of its austerity programme. As we reported yesterday, even EC president José Manuel Barroso is now hinting at a change of approach….

We get French PMIs shortly, at around 8am BST. Germany's data comes 30 minutes later, followed by the figure for the whole eurozone at 9am BST (10am CET).

China has already reported its PMIs for April, and they were rather lower than expected. The Chinese flash HSBC PMI fell to a two-month low of 50.5 in April from 51.6 in March. That has knocked stock markets in Asia overnight (more to follow).

Also coming up today… Italy's president, Giorgio Napolitano, will hold meetings in an effort to form a new government. And UK public finances (at 9.30am BST) will show how Britain is faring.

We'll be tracking all that, and other developments across the eurozone and beyond….

Updated at 7.50am BST © Guardian News & Media Limited 2010

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Sluggish industrial performance and shrinking manufacturing output renew fears of triple-dip recession in the UK. Demand for goods has been hammered by economic uncertainty and punishing austerity, while exports have been hit by the eurozone crisis…

Powered by article titled “UK industrial production growth weaker than forecast” was written by Josephine Moulds, for on Friday 11th January 2013 10.51 UTC

UK industry posted sluggish growth in November, renewing fears that the economy shrank in the final quarter and pushing Britain towards an unprecedented triple-dip recession.

Manufacturing output dropped 0.3% in November, after a fall of 1.3% in October, according to the Office for National Statistics.

The wider reading of industrial output – also including output from the energy and mining sectors – grew by 0.3% following a sharp decline in October, which was revised down further on Friday to -0.9%. November’s figures were boosted by an 11.3% jump in oil and gas output – the biggest increase since 1968 – after maintenance of the Buzzard North Sea oil field was completed.

But both manufacturing and industrial production missed expectations, with analysts hoping for rises of 0.5% and 0.8% respectively.

Demand for goods in the UK has been hammered by economic uncertainty, below-inflation wage growth and punishing austerity, while exports have been hit by the ongoing eurozone crisis.

Britain emerged from recession in the third quarter of last year and there were tentative hopes the economy could continue to grow in the last three months of 2012. But a series of gloomy releases – including weak trade data and downbeat purchasing managers’ surveys – have fuelled fears of a contraction in the final quarter. If output continues to fall in the first quarter of this year, the UK will fall into its third recession in four years.

Separate figures out from the ONS on Friday only added to concerns, as construction output dropped 3.4% in November.

Howard Archer of IHS Global Insight said: “Hopes the economy avoided a renewed GDP dip in the fourth quarter of 2012 took another significant blow as industrial production could only manage a small rebound in November following sharp drops over the previous two months, while construction output suffered a marked relapse following October’s surge.” © Guardian News & Media Limited 2010

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Spain applies for bank bailout funds. Eurozone finance ministers are expected to approve the disbursement later today. Details of vital bond swap for Greece.Greek bonds rally, but there’s concern in Athens. U.S. manufacturing data offers reasons for optimism…

Powered by article titled “Eurozone crisis live: Greece launches debt buyback scheme” was written by Graeme Wearden (until 2.30) and Nick Fletcher (now), for on Monday 3rd December 2012 14.41 UTC


Holland and Monti emphasize

French president Francois Hollande and Italian PM Mario Monti have repeated the “euro is irreversible” line at a joint press conference in Lyons.

Monti has also said the spread between Italian and German bonds was still not acceptable although it was on a pleasing downward trend. Then he reportedly added:

Meanwhile in the European parliament, German finance minister Wolfgang Schaeuble said solutions to the eurozone crisis can only be found step by step.


Here’s some more expert comment on today’s Greek bond swap (via the Reuters terminal):

Ricardo Barbieri, strategist at Mizuho

[The pricing] indicates they really want the swap to succeed.

Some investors might be tempted to participate in the swap because of the ability to simplify their position, should they wish to maintain exposure to Greece, otherwise an opportunity to exit totally, completely their positions at a level that is better than Friday’s close.

Stuart Thomson, manager of the Ignis Strategic Bond fund.

This is just another milepost on Greece’s road to Hell, which is of course, paved with good intentions.

The success of this buyback depends on the hedge funds and very much on their calculation whether a holdout could eventually get them more, or whether they will face a haircut in the next round.

I’ve got to scoot now, so Nick Fletcher is your host. Cheers all. GW


In the comments section below, 200gnomes points out that I’ve not mentioned claims that ex-Greek PM George Papandreou’s mother appears on the list of Greek tax evaders.

Not a conspiracy of silence – more that I”m not really sure what to make of the story.

Anyway, the raw facts are that two Greek newspapers, “To Vima” and “Proto Thema”, reported yesterday that Margaret Papandreou (89) is on the Lagarde List, and has €550m squirreled away in a Swiss bank account.

The claims (which would be absolute dynamite if true) have been very strongly denied by the Papandreou clan, with Mrs P claiming the family were being victimised for having “never served this country’s interest groups” (a claim that left TheGribbler despairing in the comments below).

The FT has more details of the denial (£).

We may have more details later.


US manufacturing sector keeps growing

Another positive piece of industrial data – America’s manufacturing PMI (as measured by Markit) rose in November to 52.8, up from 51 in October. That means growth accelerated during the month.

A sub-index that tracks new orders also rose, suggesting that the US economy is ending 2012 in better shape than much of Europe.

Confusingly, we’ll have another manufacturing PMI reading later this afternoon (the ISM one).


Haldane: Our grandchildren will pay for this crisis

The cost of the financial crisis will linger for decades, and the bill could still be being paid off in two generation’s time.

So warned Andy Haldane, the Bank of England’s executive director of financial stability, in an interview on BBC Radio 4′s World At One programme.

Haldane explained that in terms of the loss of incomes and outputs, this is as bad as a world war (elaborating on a point he made in late October when he applauded the Occupy movement).

Nick Sutton, the show’s editor, has the key quotes:

The whole programme’s online here, and you can here Haldane’s section here on Audioboo.


Spanish bank funding request – more details

Reuters has the full details of the Spanish bank bailout request:

Spain on Monday requested formally the disbursement of €39.5bn ($51.4bn) of European funds to recapitalise its crippled banking sector, the Economy Ministry said in a statement.

The money – €37bn for the four nationalised banks Bankia, Catalunya Banc, NCG Banco and Banco de Valencia and €2.5bn for the so-called “bad bank” – should be paid to the state’s banking fund FROB around Dec. 12, it added.

Eurozone finance ministers are expected to approve the disbursement later on Monday when they meet in Brussels for their monthly meeting.

The €37bn figure was approved by the EC last week (and covered in Wednesday’s blog).


Spain makes bank bailout request (not sovereign bailout reqest)

Just in: Spain has officially requested a bailout for its banking sector.

A statement issued in the last couple of minutes shows that the aid would be dispersed to Madrid on or around 12 December.

To be clear, this isn’t the long-anticipated request for a full-blown bailout – it’s the application to recapitalise the battered banking sector (agreed in principle this summer).

The news caused a little flurry in the financial markets, sending German bond prices falling and pushing the euro to a new six-week high against the dollar ($1.3075).

One fund manager reckons computer-based trading systems (the algorithmic systems that react almost instantly to the latest news) may have got confused …


Protests in Athens

Two different sets of anti-austerity protests have been taking place in Athens today.

One involves municipal workers, who are continuing to demonstrate against plans to lay off staff across the state sector (as part of the austerity plan demanded by the Troika):

The second protest is taking place to mark the International Day of People with Disability, with a group demonstrating against cuts to Greek welfare spending.

Disability groups say that Greece’s austerity programmes have deprived many people of their benefits.

Here’s some more photos from Athens:


Italian bonds rally

Italian government debt have been strengthening this morning, pushing down their yield (the interest rate on the bonds).

And in the last couple of minutes the spread between Italian and German 10-year bonds has dropped below 300 basis points mark for the first time since March.

Italy’s 10-year bond yield: 4.39%, down 11 basis points

Germany’s 10-year bond yield: 1.418%, up 3 basis points.

Another fillip for those who reckon the eurozone crisis is petering out (or at least entering a calmer phase)


Comment is free (ly available again)

Looks like the comments section has been fixed – thanks for your patience. Apologies again for the disruption.


Greek central bank hails new start

Back to the Greek bond swap plan – and in Athens the central bank of Greece has just stated that the deal opens the way for economic recovery.

In a statement, it said

A new start is now possible. [The deal] creates plausible expectations of a recovery of the Greek economy, perhaps even earlier than projected at present.

But before that happens, the Bank of Greece sees more pain ahead. It predicted that GDP would shrink by ‘slightly more than 6%’ in 2012, and another 4.5% in 2013, before ‘positive growth’ finally returns in 2014.


We’ve plotted this morning’s manufacturing data (see 9.44am onwards) on one graph, showing how the main eurozone countries and the UK have performed:


This afternoon’s Eurogroup meeting of euro finance ministers is the fourth in as many weeks. Luke Baker of Reuters reckons they’re approaching their half century of crunch gatherings since the crisis began.

Canaryatthewharf made a similar point in the comments section below:

Hopefully we can start focusing soon on wider issues than just the euro-zone if the debt buy back works and Greece gets sufficient cash to function until end-2013.

But are we really approaching a lull? Economists and assorted experts are divided, between those who reckon the eurozone isn’t getting the credit for the decisive progress made in recent months, and those who reckon policymakers have only papered over the cracks.

This little exchange on twitter between economist Megan Greene (bearish) and journalist Joe Weisenthal (bullish) shows the opposing views.


Scepticism in Greece over bond swap deal

Over in Greece our correspondent Helena Smith says the debt buyback has got a mixed reception this morning. She writes:

Among economists, analysts and even government officials there is widespread scepticism about the scheme. Speaking on the state-run TV channel NET this morning, finance experts described the buyback operation as “very problematic” with many calling it the most difficult part of the latest EU-IMF backed attempt to rescue Greece.

“A big part of the bonds that have been issued are in the hands of hedge funds,” said prominent economics professor Charalambos Gotsis, adding that investors had acquired them earlier in the summer at very good rates. “With Greece no longer facing the scenario of a Grexit, it is debatable whether they will want to part with them,” added Gotsis who reckoned that hedge funds had acquired around €20bn worth of the government bonds.

Greek banks, which hold an estimated €15bn of the new bonds, have also opposed the scheme claiming it will put them in the onerous position of having to forfeit potential profits.

Their stance prompted Prime Minister Antonis Samaras to insist over the weekend that banks would actually benefit from the deal as the value of the bonds they held was far lower. Samaras, who is acutely aware that Greece’s next €44bn loan tranche is dependent on the buyback (with officials saying it will pare back the country’s debt load by at least €30bn), also quashed speculation that Greek pension funds would be part of the transaction. “The banks’ reaction undoubtedly played a role in the offer being better than expected,” said one insider referring to government prices being more generous than anticipated [as explained at 8.38am]

But, interestingly, Greek finance ministry officials this morning did not rule out the scheme being extended beyond the official close of the deal at 5pm Friday, adds Helena.

‘If it doesn’t go well then logically [the scheme] will be extended,’ said one finance ministry official. ‘But let’s not jump the gun and talk about failure before it has even got off the ground.’


No comment

Looks like we’re having a few technical glitches with the Guardian’s comment system at the moment…. Apologies for that (I don’t think I’ve broken anything). Hoping it will be resolved shortly….


UK manufacturing beats forecasts

The UK’s manufacturing sector has crawled its way back towards growth, with a PMI of 49.7 in November. That’s much better than October’s 47.7, and better than analysts had expected.

Just slightly below stagnation isn’t great – but it suggests the sector might be staging a recovery.


Eurozone recession is deepening – economist

Chris Williamson, chief economist at Markit, warned that the eurozone’s manufacturing sector remains in a “severe downturn”, following the news that the slowdown eased last month (see 9.44am).

Williamson said:

The ongoing steep pace of manufacturing decline suggests that the region’s recession will have deepened in the final quarter of the year, extending into a third successive quarter.

With official data lagging the PMI, the rate of GDP decline is likely to have gathered pace markedly on the surprisingly modest 0.1% decline seen in the third quarter.

There is also reason to be optimistic, though:

Production and employment look set to fall at reduced rates in
coming months as export demand slowly revives in markets such as the US and Asia.


the ongoing uncertainty caused by the region’s debt crisis means business confidence clearly remains fragile and companies continue to focus on tight cost control, meaning any robust recovery still looks a long way off and prone to a set-back if the crisis worsens.


Eurozone manufacturing sector shrinks again

It’s one of those mornings when we’re inundated with manufacturing data for the previous month from across the global economy (via Markit)

Today’s Purchasing Managers Indexes (PMIs) paint a mixed picture – so here are the highlights (and as a reminder, any number below 50 = contraction).

• The eurozone’s manufacturing sector’s PMI of 46.2 for November was the highest since March, but means the sector has now shrunk for the last 16 months

• Germany kept shrinking, with a PMI of 46.8, up from 46.0 in October.

• France’s manufacturing output fell sharply again, with a PMI of just 44.5, up from October’s 43.7. [garble corrected - thanks madeupname2 !]

• Greece’s manufacturing sector continued to contract sharply, with a PMI of just 41.8 (slightly better than October’s 41.0).


Euro up

The euro has risen in value this morning following the Greek debt swap announcement, up nearly half a cent against the US dollar at $1.303.

The single currency has shrugged off the news that Moody’s cut the triple-A rating of the European Stability Mechanism euro rescue fund late on Friday.

But Kit Juckes, Global macro strategist at SocGen, isn’t impressed:


A Greek debt calculator

Those bright sparks at Reuters have created an interactive Greek bond buyback calculator, which lets you work out how much Athens could slice off its debt mountain through the swap.

It’s here.

Remember that the buyback cost can’t exceed €10bn (the maximum amount of new bonds that Greece plans to offer in exchange).

Playing around with it, I can get Greece’s savings up to €52bn….


Interestingly, today’s offer appears to be a little more generous than had been indicated a week ago. When the deal was announced, the eurogroup suggested that Greece would pay no more than the previous Friday’s closing price.

Today’s prices are higher – perhaps an indication that Greece simply can’t let the deal fail.


Greek debt rises in value

Greek sovereign debt is rallying in early trading as traders absorb the details of the bond swap announced this morning.

Via the Reuters terminal:



Those prices are both slightly below the minimum that Greece is proposing to pay (the official statement has the full chart), suggesting some uncertainty over the deal’s chances.

And this image shows how the value of the 2023 bond rose this morning (from just a third of its face value).


See the statement

You can download the official statement from the Greek ministry of finance here (in English).


Greece launches debt buyback scheme

Good morning, and welcome to our rolling coverage of the eurozone crisis – and other key events in the world economy.

We can start with some breaking news: Greece has officially launched a scheme to buy back its debt from private investors.

This scheme is a crucial part of the new deal for Athens agreed a week ago. It needs to succeed to unlock the €44bn of rescue loans due to Greece.

In the last few minutes, The Hellenic Republic ministry of finance announced it will offer holders of Greek debt the chance to swap their bonds for up to €10bn of six-month bills.

Investors will be offered the chance to swap their Greek bonds for a maximum price of between 40.1% and 32.2% of their face value (depending on their maturity). It will work like a “Dutch auction” - with Greece starting with a low offer and raising it until investors bite.

The deal will run all week – concluding at 5pm Friday 7 December. The results will then be announced as soon “as reasonably practicable”.

But the Hellenic Republic also cautioned that the swap can only proceed if it meets “all of the conditions under a financing agreement entered into with the European Financial Stability Facility” – which is providing the funds for the swap.

Finance Minister Yannis Stournaras is due to present the findings to the rest of the eurozone this evening in Brussels.

I’ll be tracking the reaction to the debt swap plan, as well as other key events through the day. That will include a splurge of manufacturing data that will show how global industry is coping with the crisis. © Guardian News & Media Limited 2010

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Demand for Britain’s manufactured goods is being choked off by the prolonged and deepening slump in the eurozone. Events overseas – the US fiscal cliff, China’s slowdown, and the travails of the eurozone casting a shadow over UK manufacturing…

Powered by article titled “Europe to blame for UK manufacturing downturn” was written by Larry Elliott, economics editor, for on Thursday 1st November 2012 12.03 UTC

There’s a one-word explanation for the disappointingly weak survey of manufacturing out on Thursday: Europe.

Despite some modest success recently in diversifying into the faster growing markets of the globe, Britain’s nearest neighbours represent by far the biggest destination for goods sold overseas. Demand for those goods is being choked off by the prolonged and deepening slump in the eurozone.

What’s worse, the uncertainty caused by whether Greece will get a new bailout and whether Spain will have to seek financial help from the European Central Bank is depressing business confidence and causing investment projects to be mothballed. November’s health check on industry from CIPS/Markit showed that demand for capital goods remains weak, and that is wholly consistent with a corporate sector unwilling to spend money until the uncertainty is lifted.

The one bright spot in an otherwise gloomy report was that demand for consumer goods was up. That chimed with recent evidence that spending in the high street is on the up, although the fact that orders for exported consumer goods also rose is something of a puzzle.

As the CBI noted on Thursday, events overseas – the US fiscal cliff and China’s slowdown in addition to the travails of the eurozone – are casting a long shadow over the UK manufacturing sector. There are hopes that China has bottomed out, that the Americans will step away from the fiscal cliff and that Europe is finally getting its act together.

For now though, Thursday’s figures suggest that recovery will remain weak, that rebalancing is a pipedream. At this stage, the City is betting against further stimulus from the Bank of England next week but if the surveys for construction and services are as weak as those for manufacturing there may be a crash re-think. © Guardian News & Media Limited 2010

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European PMI index contracts again- what do the economists say? German service sector shrinks; Chinese manufacturing output at nine-month low; France heads into recession; U.S. jobless claims inch higher…


Powered by article titled “Eurozone crisis live: Another recession looms as private sector keeps shrinking” was written by Graeme Wearden, for on Thursday 23rd August 2012 06.52 UTC


Another word on Antonis Samaras’s interview with Le Monde (see 11.44am): there’s a bit of excitement swirling that Samaras has apparently discussed Greece generating money from some of its uninhabited islands.

The quotes don’t appear in the section of the interview which Le Monde has uploaded. However, Associated Press has got hold of the full interview, and reports that Samaras said that:

as long as this doesn’t pose problems for national security, some of these isles could have a commercial use.

That, though, doesn’t mean Athens is looking to sell them all to the first millionaire who shows up. Samaras added;

This is not, in any way, about selling them off for cheap, but about transforming unused terrain into capital that could generate revenue, at a fair price.

As The Journal explains here, some German politicians argued two years ago that Greece should look to profit from the thousands of islands that make up the country. That was very unpopular with Greek citizens, though, so Samaras will need to treat carefully…..


Good news is in short supply so far today, particularly from Germany, where car maker Opel has said employees will work reduced hours at two of its German factories, to address lower demand for vehicles.

The division, part of General Motors. said that it had reached a deal with unions and its employee councils. Staff at two factories, at Ruesselsheim and Kaiserslautern, will work reduced hours on 20 days through the end of the year.


The news that Germany’s economy weakened this month (see 8.38am) may make it harder for Angela Merkel to make concessions to help address the eurozone crisis, economists fear.

Commenting on this morning’s data which showed Germany’s private sector shrank at the fastest pace in over three years, ING economist Carsten Brzeski said:

For German Chancellor Merkel, today’s growth numbers are not as comfortable as they might look as they complicate the next steps in the euro crisis.

Economists are forecasting that Germany’s GDP will shrink in the current quarter, which could make the German people even less receptive to the idea of bailing out Southern Europe.

On the other hand… it might also concentrate minds on the damage being caused by the crisis, and the potential for further immense economic chaos if the euro disintegrated….


QE helps the rich the most

This might interest/enrage UK readers: the Bank of England has released a report into the impact of its quantitative easing programme. It admits that the richest 5% of households benefited most from the creation of hundreds of bilions of pounds of electronic money, while young people and the poorest gained the least.

Economics editor Larry Elliott has the story here.

And here’s some reaction from Twitter:


Greece’s prime minister, Antonis Samaras, has told Le Monde that social unrest could spread across Europe if Greece were to crash out of the euro.

Samaras told the French newspaper that Greece can still be saved if European politicians “do our job”, and criticised those who claim that a Greek exit from the euro would be manageable.

Samaras said:

A “Grexit”, as it is called, would be devastating for Greece and detrimental to Europe. This would result in a further reduction of 70% of our standard of living – it has already decreased by 35% – by the combined action of a devaluation and inflation. No society can address this impact. No democracy there could survive.

Social upheaval could become very contagious in other European countries. Add, of course, the reaction of financial markets to be anticipating the release of other European countries, causing a domino effect.

Samarasalso repeated the line he gave to German tabloid Bild, that Greece just needs “air” to help it recover. More here.


No Olympic boost for UK high street

Bad news for the UK economy: high street retailers have reported that sales fell this month, and fear that the next three months will be tougher.

The monthly CBI distributive trades survey found that 27% of retailers reported an increase in their volume of sales compared to a year ago, while 31% said they had seen a fall. Allowing for rounding, that works out as a “net balance” of –3.

Somewhat optimistically, the CBI describes this as “broadly in line with expectations of +3%”. Clearly it’s worse (and also, Reuters reckons economists were expecting +15).

Most worryingly, business sentiment has weakened more than at any time since February 2009.

Judith McKenna, chair of the CBI distributive trades panel and Asda’s chief operating officer, said hopes of an Olympic bounce have been dashed.

Although this summer’s events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street.


Norway’s economy continues to defy the general malaise in Europe. Its economy grew by 1.2% in the second quarter of 2012, or 1% if oil revenue was excluded.

That beats all the major countries in the European Union (which shrank by 0.2% during the quarter).

Being outside the EU is not holding Norway back. This graph shows how its economy emerged from recession at the start of 2010, and has posted strong growth since:


In the bond markets, Spanish government debt has weakened this morning.

The yield* on Spain’s 10-year bonds has risen to 6.432%, up 11 basis points overnight. That’s still some way below the “danger zone”; but it means the spread between Spanish and German bond yields has widened again.

German-Spanish spreads had been closing in recent days, thanks to speculation that the European Central Bank will act to lower Spain’s borrowing costs. Today, though, there is plenty of worry that the ECB might disappoint.

Jane Foley of Rabobank commented:

The recession in Spain and the impact of slower growth in Europe on countries as far afield as China and Japan (which have recently posted poor export data) provide a good argument for the ECB to underpin the current better tone of the market.

However, clearly there are risks; the ECB may insist on more action from politicians before acting.

*- in general terms, the yield is the interest rate on the bond, so a measure of how much it would cost a country to borrow


City economists agree that this morning’s PMI data shows the eurozone is in recession (although we won’t know for sure for a couple of months).

Having shrunk by 0.2% between April and June, the news that private sector output fell again in August indicates the contraction continued in the current quarter.

Here’s a round-up of reaction (via Reuters):

Julien Manceaux of ING:

The composite PMI still indicates a contraction of activity in the euro zone as a whole. In our view, this confirms that the decline in euro zone GDP in the second quarter is likely to be the first leg of a technical recession.

Jeavon Lolay of Lloyds Banking Group:

In terms of where they are this is consistent with contraction in euro area GDP.

You could argue it was slightly better than expected but there isn’t
much to add. It could have been gloomier.

Annalisa Piazza of Newedge Strategy:

Our survey-based GDP forecast continues to point to a -0.3-0.4 percent q/q decline in euro zone GDP in Q3. However, a less gloomy scenario might emerge, should business confidence and activity stabilized in the coming months.

There was one bit of good-ish news this morning; updated GDP data confirmed that Germany grew by 0.3% in Q2 2012.


Europe’s private sector has shrunk again in August, for the seventh month in a row, driven by this morning’s weak performance from Germany (see 8.38am).

The Eurozone PMI composite output index, which measures activity in services and manufacturing firms across the euro region, hit 46.6 this month. Any number below 50 means a contraction.

The figure is slightly better than July’s 46.5, suggesting the euro economy shrank very slightly less this month. But the data confirms fears that the eurozone has dropped into recession.

Rob Dobson, senior economist at Markit said:

Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook.

The downturn is still led by the manufacturing sector, despite its pace of contraction easing a little this month. The service sector is also not out the woods, as business activity declined at an accelerated pace.

While eurozone manufacturing showed some improvement (45.3, up from 44 in July) was a little better than expected, service sector output was worse (47.5, down from 47.9).

This graph shows how the PMI data often closely tracks GDP. That backs up Rob Dobson’s point about the eurozone sliding into recession (it shrank by 0.2% in the second quarter of 2012).


Schäuble: Time will not solve Greece’s problems

Wolfgang Schäuble, Germany’s finance minister, has warned this morning that Greece’s problems will not be solved by granting it more time to hit its targets.

Schäuble just spoke to Germany’s SWR radio, and declared:

More time is not a solution to the problems

… adding that the two-year extension being sought by Greek prime minister Antonis Samaras would certainly mean “more money”.

Schäuble also argued that the eurozone had reached the limits of what is economically viable with its aid to Greek, a signal to Athens that it must deliver on what has been agreed.

In the City, Elisabeth Afseth of Investec is also unconvinced by Samaras’s argument that more time would not necessarily mean more money. She writes:

With its European partners reluctant to ‘throw money into a bottomless pit’ Samaras’ insistence that Greece requires no more money is supposed to reassure. It is blatantly obvious though that running a higher deficit for longer will involve additional debt, it may be recouped in the long run by stronger growth, but there will be extra money required initially.

Greek officials have been saying a 2 year extension will require at least €20bn of extra funding, but the plan is for this to be found though using IMF funds earlier than planned and through maturity extensions.



Germany’s private sector has suffered its weakest monthly performance in three years, data just released by Markit showed.

A worse-than-expected performance from its service sector is to blame, with output contracting (the German services PMI fell to 48.3, from 50.1).

Manufacturing output also shrank again, but at a slower pace (with a PMI of 45.1 versus 43 last month).

The overall picture is of an economy suffering from the crisis in the eurozone periphery.

Tim Moore, senior economist at Markit said:

The German economy is sailing into greater headwinds as the third quarter progresses, with PMI readings slipping deeper into territory normally associated with GDP contractions.

Outside of the 2008/09 downturn, the German composite index hasn’t been this low for this long since the time of the 2003 recession.


This is perhaps the most alarming fact in this morning’s Chinese manufacturing data (see 8.02am): stocks of finished goods jumped at their fastest rate since the survey began in 2004.

This graph shows how Chinese factories have been left with more and more unsold products since the start of the year:

With new orders falling, concern is growing that Chinese manufacturers will be left with more and more products that they can’t sell into a slowing global economy.

The Financial Times reported earlier this week that stocks of clothes, shoes, electrical goods, cars and even houses are growing to “Himalayan levels”, adding:

Over the past week, the country’s main retailers descended into a price war. It began when online retailer vowed that it would sell home appliances at a zero profit margin.

The commodities sector is also dealing with a huge inventory overhang, most graphically in the piles of coal that have built up at ports across the country.

More here.


The French private sector continued to shrink last month, data just released showed. But there are also reasons for optimism.

The composite French PMI came in at 48.9, showing that private sector output fell again. But this is an improvement on July’s 47.9, and the best figure in six months.

French manufacturing output continued to fall, as the long-running contraction in its factory sector rolled on. The PMI of 46.2 shows that output still fell, but at a less steep rate than July.

Jack Kennedy, senior economist at Markit (who compiled the report), said the data showed that France might finally slide into recession this quarter after nine months of stagnation:

While France just avoided a fall in GDP during the second quarter of 2012, according to the first official estimate, PMI data currently suggest contraction is on the cards for Q3.

Moreover, the continued declines in employment shown by the latest flash PMI data point to rising jobless levels, which would further weaken demand.


Key event

This morning’s weak manufacturing data could prompt China to launch a new stimulus package, economists believe.

HSBC, whose data shows that output dropped to a nine-month low, said the Beijing government should ease monetary policy. Otherwise, the world’s second largest economy could be knocked off course.

HSBC chief economist for China, Qu Hongbin, said:

Chinese producers are still struggling with strong global headwinds.

To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months.

The data comes a day after some very poor trade data from Japan, which showed a slump in exports to the European Union.

Getting a clear picture of the state of the Chinese economy is tricky, but there are suggestions that some factory bosses are laying off workers or shutting down altogether.


Good morning, and welcome to our rolling coverage of the eurozone crisis.

Coming up today: fresh economic data showing the state of the European economy will be released this morning. The monthly PMI surveys are expected to show that activity in the eurozone services and manufacturing sectors fell again in August.

With eurozone GDP having shrunk in the second quarter of 2012, the data should show whether the situation has worsened.

Disappointing manufacturing data from China has already been released this morning. Output hit its lowest level since last November.

The Chinese Purchasing Managers’ Index (PMI) dropped to 47.8, compared with a final reading of 49.3 in July, according to HSBC. Any number below 50 indicates that manufacturing activity is contracting.

Here’s what’s coming next:

• French PMI for Manufacturing, and for Services 8am BST

• German PMI for Manufacturing, and for Services 8.30am BST

• Eurozone PMI for Manufacturing, and for Services 9.00am BST

The overall eurozone composite PMI is also released at 9am, which will show how the region’s private sector performed. Economists believe it will show another contraction, but will it be worse than last month’s 46.5?

We’ll also be tracking the latest developments across the eurozone, as usual.

One key event today: Angela Merkel and François Hollande will meet in Berlin tonight to discuss the situation in Greece, and Athens’ request for a delay to its financial programme. But as reported last night, it appears that the Greek government must wait until at least mid September for an answer. © Guardian News & Media Limited 2010

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EU Summit optimism rally fizzles as youth unemployment rate across eurozone hits 22.6% in May, Eurozone manufacturing output gets stuck at three-year low and US manufacturing registers a surprising fall, while Athens moves off track on bailout program…

Powered by article titled “Eurozone crisis live: Unemployment rate hits new high as manufacturing suffers” was written by Graeme Wearden, for on Monday 2nd July 2012 14.43 UTC

3.36pm: David Cameron is updating MPs in the House of Commons now about the decisions made at last week’s EU summit.

The Prime minister says he won protection for the EU single market as the eurozone moves towards greater integration, and also also defended his decision not to allow a debate on Britain’s rebate, calling it “fully justified” (as the UK would otherwise be the highest net contributer to the EU).

Cameron also pointed out that EU countries are now more than €3bn deeper in debt than at the last EU budget.

On the issue of a referendum, the PM also defended his opposition to a full in-out referendum today, He argued that he doesn’t believe that leaving the EU would be best for Britain, but also doesn’t want the status quo to be reinforced at this time.

Europe, he adds, must “deal with the instability and chaos”, and fix its banking sector.

Cameron also announced that a full joint committee of Parliament will be set up to investigate UK banking, following the Barclays/Libor scandal.

My colleague Andrew Sparrow is covering the whole session in his liveblog from Westminster, here.

3.01pm: Bad economic news from America has just been released, with the latest manufacturing data coming in much worse than expected.

The monthly ISM survey dropped to 49.7 for June, a sharp decline on May’s 53.5 and a big MISS compared with economist forecasts of 52.0. That means the sector shrank, for the first time in almost three years (we haven’t seen an ISM number below 50 since June 2009).

That means the US and eurozone factory sectors both contracted last month – worrying news for the state of the world economy.

This graph, via contains ISM data going back to the mid-1960s, and shows how the US manufacturing recovery has stumbled in recent months.

Today’s fall was driven by a big drop in domestic orders*, suggesting conditions could be tough for the next few months. That’s potentially very bad news for Barack Obama’s prospects in the presidential election in November.

* – the biggest fall in new orders since 9/11

2.29pm: Alexis Tsipras, the leader of the Greek Syriza party (now the largest opposition group), has warned this afternoon that Greece will be forced out of the eurozone unless its financial programme is eased.

Speaking at a conference organised by The Economist, Tsipras came out strongly against Jörg Asmussen’s argument a few hours earlier (see 7.51am) that Greece cannot expect its reform plan to be eased. Instead, Tsipras reiterated that the country needs less austerity if it is to keep within the euro.

Megan Greene of Roubini Global Economics is at the event and tweets the highlights, and a picture of Tsipras in action as he called for changes to Greece’s financial programme (known as the Memorandum):

1.41pm: A piece of good news for Greece – it has received the last €1bn portion of its latest bailout aid tranche.

This is the outstanding portion of the €5.2bn aid package, which EU officials withheld back in May as Greek politicians failed to form a government. Now Antonis Samaras has been sworn in, it’s now been handed over.

1.38pm: Another Libor development (see 12.52pm for earlier round-up): the Serious Fraud Office is now “considering whether it both appropriate and possible to bring criminal prosecutions” over the scam.

1.32pm: Over to Cyprus, where our correspondent Helena Smith has been dispatched ahead of the island’s assumption of the EU presidency, which officially happened yesterday but formally gets underway this week.

It’s an unfortunate time for Cyprus to take the honour of the EU presidency, as Helena explains:

Cyprus’ assumption of the rotating EU presidency has been ever so slightly eclipsed by the arrival today of a preview team of Troika inspectors from the EU, ECB and IMF.

The team, which will install itself at the finance ministry and central bank, will begin assessing the state of the island’s public finances before pronouncing on how big a rescue package Nicosia will need to shore up a banking system badly effected by over-exposure to debt-stricken Greece. A ball park figure doing the rounds is €10bn – the equivalent of almost 50% of GDP. In addition to shoring up the island’s battered banks, Cyprus will also be required to refinance €4bn in state debt over the next three years. “It may be more [than €10bn], it may be less,” said George Sklavos, a senior economist at the ministry.

The island’s veteran communist leader Demetris Christofias is still holding out for a loan from either Russia or China in the hope that it can soften the impact of asking for emergency loans from Europe. Niether Moscow nor Beijing have responded to the request so far.

12.52pm: Plenty of developments in Britain’s Libor scandal today.

Marcus Agius has now resigned as chairman of the British Banking Association (details here), shortly after quitting the Barclays chairmanship.

The government is expected to announce an inquiry into the way the interbank lending rate is operated and regulated, when George Osborne and David Cameron address parliament about the issue this afternoon (details here).

The government is ruling out a full-scale Leveson-style inquiry (which the FT’s Ben Fenton has already wittily baptised as the Leverageson Inquiry), while Tory MP Douglas Carswell wants an even more wide-ranging probe into the mistakes made in the run-up to the crisis, putting central bankers in the dock for allowing the long credit boom.

Other politicians have also waded into the scandal today, with Liberal Democrat Lord Oakeshott accused the Barclays board of shooting “the head of the firing squad” while missing the prisoner (Bob Diamond).

We’ve also pulled together a gallery of possible successors for Agius at Barclays, including Sirs Roger Carr and Nigel Rudd.

12.34pm: Developments in Greece – new prime minister Antonis Samaras is expected to meet with the leaders of the junior partners in his coalition (Evangelos Venizelos of Pasok and Fotis Kouvelis of Democratic Left) tonight.

That indicates Samaras is ready to resume work work after his eye surgery last week. That’s particularly important because Greece’s Troika of foreign creditors (officials from the IMF, the ECB and the EU) will start official talks with the Athens government tomorrow.

The ECB’s Jörg Asmussen set the tone for the talks earlier today when he warned Greece against lobbying for its financial programme to be relaxed. Asmussen’s warning that Greece has made almost no progress in the last three months also suggests we could face a new round of clashes about missed targets.

12.17pm: Here’s a round-up of expert reaction to the news that eurozone unemployment is at a new record high (see 10.01am onwards).

Andrea Broughton of the Institute for Employment Studies

EU policymakers and stakeholders are aware of this potential catastrophe of creating a “lost generation”, but so far appear powerless to halt the rising jobless figures among young people. This is a huge problem to tackle, but it is essential that young people are encouraged to develop skills that are in demand and that they are given the chance to obtain meaningful work experience that enables them to gain a foothold in the labour market.”

Howard Archer of IHS Global Insight

With the Eurozone likely having suffered appreciable GDP contraction in the second quarter and in grave danger of contracting again in the third, and with Eurozone business confidence generally low and fragile, the likelihood is that the Eurozone unemployment rate will move significantly higher over the coming months. Indeed, it now looks odds-on that the Eurozone unemployment rate will reach 11.5% by the end of the year, although the situation will vary markedly between countries.

Companies generally are under serious pressure to keep their labour forces as tight as possible to contain their costs in the face of current limited demand, strong competition, and worrying and uncertain growth outlooks.

12.07pm: Finland’s continued opposition to Europe’s bailout fund buying up sovereign debts (see 11.15am), is a sign that countries at the core of the eurozone are still unwilling to increase their exposure to the problems of the periphery, argues economist Nouriel Roubini:

Roubini’s colleague, Megan Greene, also questions whether the idea was really a game-changer anyway, writing:

The measure announced that might be most useful to Italy is a vague commitment to using the EFSF and ESM more flexibly in the bond markets to reduce borrowing costs for weaker countries without full troika reviews. The idea that there will not be troika reviews is hardly a victory, given that both Spain and Italy are already subject to the excessive deficit procedure with built-in fiscal targets and to IMF visits. Could EFSF/ESM bond buying help Spain or Italy? Whether in the secondary or the primary markets, I’m skeptical.

11.15am: Finland is sticking to its hardline position that Eurozone bailout funds should not be used to buy government bonds. It’s not clear, though, that it can block the idea.

The Finnish government told a parliamentary committee this morning that it, and the Netherlands, would both block the European Stability Mechanism (ESM) from buying sovereign debt in the secondary bond market (to, for example, drive down the bond yields of Spain or Italy).

At the EU Summit last Friday, German chancellor Angela Merkel has indicated that leaders had agreed “precise conditions” under which bonds could be bought. This was reported as one of the Summit breakthroughs, and a win for weaker members of the eurozone over the wealthier centre.

So has Finland just derailed the plan? Not necessarily. Any decision to start a bond-buying programme ought to be taken unanimously, but in an ‘emergency situation’, it could be agreed with 85% shareholder support (based on the contributions made by each country). Finland and the Netherlands don’t have the muscle to block it (as the WSJ’s Charles Forelle ‏explains):

10.43am: Today’s weak manufacturing data increases the chances that the Bank of England will launch new measures to stimulate the UK economy this week, argues our economics editor Larry Elliott here

10.29am: This graphs shows how unemployment in Europe has been rising for the last four years:.

The rate began to rise in the second quarter of 2008, as the financial crisis began to tighten its grip on the global economy.

10.01am: As feared, eurozone unemployment has hit a new record high, and the youth jobless crisis has worsened again.

The unemployment rate across the single currency region rose to 11.1% in May, up from 11.0% in April. That’s the highest figure since the creation of the euro.

The rate across the wider Europan Union also rose, to 10.3% in May from 10.2% in April.

Youth unemployment also rose again, with another 282,000 young people (under 25) out of work across the EU compared with a year ago, including 254,000 within the eurozone. That pushed the youth unemployment figure up to 22.6% in the eurozone and 22.7% across the EU.

There are now 5.517 million young persons unemployed in the European Union, of whom 3.412 million were in the euro area.

Once again, the youth jobless data showed the deep divergences between the countries which make up the eurozone. Germany can boast the lowest youth jobless rate at just 7.9%, followed by Austria at 8.3% and the Netherlands with 9.2%.

The situation is bleakest in Spain and Greece, with 52.1% each (although Greece’s data is from March).

We’ve been hearing, and reporting, warnings for years that a Lost Generation is being created in Europe whose employment prospects will be permanently damaged by the ongoing financial turmoil. This could be the starkest legacy of the crisis.

9.57am: This graph from Markit shows how manufacturing output across the eurozone has been steadily sliding since early 2011, culminating in the three-year low recorded this morning (see 9.12am).

While Greece remains the weakest performer by far, other peripheral countries have been sliding towards it in recent months….

9.35am: After a slow start (see 8.15am), European stock markets are now showing healthy gains.

Despite the poor eurozone manufacturing data, investors are clinging to optimism that last week’s EU summit marks a real breakthrough in the crisis.

Here’s the current state of play across the main markets:

FTSE 100: up 41 points at 5612, + 0.74%
German DAX: up 51 points at 3247, + 1.6%
French CAC: up 87 points at 6504, + 1.37%
Spanish IBEX: up 40 points at 7144, + 0.6%
Italian FTSE MIB: up 204 points at 14479, + 1.43%

Traders believe we could have some breathing room now, following the summit. David Morrison, senior market strategist at GFT Markets, commented:

Expectations were low, so the fact that German Chancellor Merkel has softened her objections to the way that the euro zone’s bailout facilities can be utilized has boosted hopes of an easing in the crisis.

9.28am: Just in — Britain’s manufacturing sector clawed its way backs towards growth last month (although it’s not quite there yet).

The UK manufacturing PMI rose to 48.6 in June — much better than May’s 45.9, and closer than expected to that crucial 50-point mark that seperates expansion from contraction. Also much better than the eurozone’s own manufacturing PMI (see 9.12am).

9.12am: Europe’s manufacturing companies suffered a torrid June, and bosses expect worse times ahead.

That’s the key message from this morning’s manufacturing data, which showed that factory output across the eurozone fell sharply in June. The monthly PMI, measured by Markit, came in at 45.1 – a repeat of May’s figure, which was already the worsst since June 2009.

That signals a big contraction in a crucial sector for Europe — the part of the economy that actually makes things to sell to the rest of the world.

The number of jobs being cut across the sector hit its highest level since the start of 2010, which is a sign that firms are bracing for more trouble.

Markit’s chief economist, Chris Williamson, explained:

Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at their fastest rates for two and a half years.

Williamson estimates that Europe’s manufacturing sector probably shrank by 1% in the last three months, and believes the contraction will get worse in the current quarter.

Further proof that Europe needs a growth strategy, and another sign of just how hard it will be to get the eurozone growing again.

Update: here are the details of the eurozone PMIs:

Ireland: 53.1 14-month high
Austria: 50.1 6-month low
Netherlands: 48.9 2-month high
France: 45.2 2-month high
Germany: 45.0 36-month low
Italy: 44.6 2-month low
Spain: 41.1 37-month low
Greece: 40.1 4-month low

9.02am: The youth employment crisis in Italy has deepened.

Data just released showed that the Italian youth unemployment rate rose to 36.2% in May, which is its highest level since 1992.

The overall Italian jobless rate dropped back slightly though, to 10.1% (from 10.2% in April).

We’ll get the full details of eurozone unemployment in about an hour. In the meantime Paul Mason, Newsnight’s economics editor, has written a piece today about how today’s graduates are suffering from the crisis, and will continue to do so for decades.

8.37am: Spain’s manufacturing sector has suffered its worst month since May 2009.

June’s Spanish PMI came in at just 41.1 for June, showing that output fell sharply, and at a faster rate than May (when the PMI was 42, also well below the 50-point mark that shows whether the sector expanded or contracted).

Economists had expected a weak figure, but this is even worse than they forecast. It underlines the steady deterioration in Spain’s economy, which is already in recession.

We’ll have a full picture of the situation in the eurozone shortly, once all the data is out.

8.23am: There’s no let-up in the pressure on Barclays this morning, despite Marcus Agius’s resignation as chairman.

Labour leader Ed Miliband has already called for CEO Bob Diamond to quit too, and is also pushing for a Leveson-style inquiry into the whole banking sector.

The full story is here, along with the official statement on Agius’s departure.

8.15am: A quiet start to trading in London, with the FTSE 100 up 9 points at 5580. Other European markets are pretty flat, with the French CAC down 0.1% and Germany’s DAX down 0.2%).

The euro has fallen in early trading, down around half a cent against the US dollar at $1.262.

But the signs in the bond markets are more encouraging, with Spanish 10-year yields flat at 6.36%, and the Italian equivalent also unchanged at 5.81%.

Elisabeth Afseth of Investec reckons that Spanish and Italian bonds could be stable for a few days, in the aftermath of the EU summit:

No one in Spain will be worried about bond yields today, and with the 10 year yield down 61bps to 6.29% they may allow themselves a day or two to celebrate both yesterday’s football and last week’s EU win. We are still short of details on the latter and what exactly Germany’s concessions will mean for the Spanish bailout.

7.51am: Interesting early developments in Athens, where Jörg Asmussen, executive board member of the European Central Bank, has urged Greece to stick with its economic programme.

Speaking at a conference organised by The Economist, Asmussen warned that the upheaval caused by the second Greek election means the country is now behind schedule, and Antonis Samaras’s government must now fix this urgently.

Asmussen said that implementation has “virtually stalled” since the second bailout was agreed three months ago, adding:

The first priority for the new Greek government has to be getting the programme back on track.

There is strong pressure in Greece for the terms of its bailout plan to be eased, but Asmussen argued that this would be “risky”, as any changes would mean Greece would miss its target of cutting its national debt to ‘just’ 120% of GDP by 2020.

The speech comes at (another) important time for Greece, with its Troika of lenders arriving tomorrow to start discussions on its reform plans. Samaras himself is expected to resume work today after the recent eye operation that prevented him attending last week’s summit.

7.45am: Here’s a quick agenda of the main events coming up today.

European Central Bank board member Jörg Asmussen gives speech on the crisis in Athens – NOW (details soon)
• Eurozone manufacturing PMI data for June – 9am BST
• UK manufacturing PMI data for June – 9.30am BST
• Eurozone unemployment data – 10am BST / 11am CEST
• US ISM manufacturing data – 3pm BST / 10am EDT [corrected].

7.40am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.

There’s a lingering feeling of optimism at the start of the week, following the recent EU summit. European stock markets are expected to rise, adding to last week’s rally, as investors and analysts continue to digest the decisions taken last week (reshaping the Spanish bank bailout, moving towards a single banking union and the new growth plan).

It’s a busy day for economic news, with the release of new data from manufacturing sectors around the globe. That should show how the world economy performed in June.

The latest eurozone unemployment data is also being released this morning, and could hit a new record high.

And we’ll also be keeping an eye on the Libor rate-fixing scandal (the latest ugly smear on the City’s reputation). Barclays confirmed a short while ago that chairman Marcus Agius is stepping down following the revelations that some traders attempted to manipulate the interest rate at which banks lent to each other.

As my colleague Jill Treanor predicted last night, Agius said he was “truly sorry” that customers, clients, employees and shareholders had all been let down.

Our latest story on Agius’s resignation will be online shortly. © Guardian News & Media Limited 2010

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