Euro-area services and manufacturing output contracted more than economists forecast in October and German business confidence dropped to the lowest in more than 2 1/2 years as Europe’s recession deepened.
A composite index based on a survey of euro-area purchasing managers in services and manufacturing fell to 45.8, the lowest in more than three years, from 46.1 in September, London-based Markit Economics said today. Economists had forecast a reading of 46.5.
A separate factory index in China rose. In Germany, the Ifo institute’s business climate index unexpectedly dropped to 100.0 from 101.4 in September.
The European Central Bank and the International Monetary Fund have both lowered their forecasts for the euro-area economy as governments cut spending to plug budget gaps, eroding consumer and export demand. Even so, the region’s debt burden rose to a record in the second quarter, reaching 90 percent of gross domestic product, another report showed today.
Ifo’s measure of executives’ expectations was unchanged at 93.2, while a gauge of the current situation dropped to 107.3 from 110.3.
A gauge of euro-area manufacturing dropped to 45.3 in October from 46.1 in the previous month, today’s report showed. That’s the lowest in two months. An indicator of services output rose to 46.2 from 46.1.
Germany’s manufacturing gauge dropped to 45.7 from 47.4, while the service indicator slipped to 49.3 from 49.7.
Euro-area governments may find it difficult to reduce deficits and lower their debt burdens, with at least five of the 17 nations using the single currency already in recession.
