The euro zone economy may be doing far worse than most economists want to believe. That’s not good news for a central bank trying to rescue the single currency through a hotly-contested bond purchasing programme that has yet to get started.
The latest flash purchasing managers’ indexes, which cover thousands of euro zone companies, suggest the third quarter will mark the euro zone’s worst economic performance since the dark days of early 2009, according to Markit, which compiles them.
They predict the economy likely shrank by 0.6 percent in the quarter that finishes at the end of this month.
That’s far gloomier than the consensus 0.2 percent decline predicted in the last week’s Reuters poll of around 35 economists, and even more pessimistic than the poll’s lowest forecast of 0.5 percent.
Aside from some German resilience, there was an unexpectedly severe decline reported by French firms. Flash PMIs don’t cover Spain and Italy – those figures come out at the end of the month. But it’s a pretty sure bet there’s been a deterioration there since last month.