German PMI Contracts: Worry About Recession?

Economy

Published: December 1, 2014 4:26 am

Last Updated: December 1, 2014 6:27 am

Germany is the largest nation by gross domestic product (GDP) in Europe, and its economic engine is in deep trouble financially. The carefully watched Markit purchasing managers index (PMI) report showed contraction last month.

According to Markit:

The seasonally adjusted final Markit/BME Germany Manufacturing Purchasing Managers’ Index® (PMI) ) — a single-figure snapshot of the performance of the manufacturing economy — fell from 51.4 in October to a 17-month low of 49.5 in November, signalling contraction in Germany’s goods-producing sector. The headline PMI is now seven points lower than at the beginning of the year and remained below its long-run average of 51.9. The headline index reading followed an earlier ‘flash’ estimate of 50.0.

The irony of the situation is that Germany has forced austerity on other nations in Europe as they went through efforts to emerge from GDP contraction after the recession. By most measures, it did not work.

Now, if it cannot reverse the slide, Germany may sink into recession.

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