Published On: Wed, Sep 25th, 2019

Macron crisis: French business grinds to a halt – Brexit wreaks havoc | World | News

According to figures released by data provider IHS Markit, the Purchasing Manager’s Index for France registered its lowest level in four months. The PMI dropped from a score of 52.9 in August to 51.3 in September, leaving the country on the brink of contractions in business activity. Shocking performances by France’s manufacturing sector fuelled the declining levels of business activities.

Remaining barely in expansion territory, the sector dropped below the PMI’s average as it registered a score of 50.3 in September, a 1.2-point slump from last month’s reading.

Services firms performed slightly better but still showed signs of a slowdown, once again dropping below the average.

Economists scored the sector at 51.6 for September after registering almost two points higher at 53.4 last month.

The PMI survey studies how many firms report better than normal business conditions in any given month.

Eliot Kerr, IHS Markit’s economist, said: “With services firms registering their slowest rise in activity since May, fears of negative spill-over effects from the manufacturing sector are coming to fruition.

“Any intensification of such effects would likely dampen economic growth going forward.”

Chris Williamson, IHS Markit’s chief economist, revealed that business managers expressed fears that Brexit and global trade tensions were to blame for the slump.

He added: “If the manufacturing sector, which is currently in its most severe recession since 2012, continues to weaken, there will also be concern about the spread of this unease to the rest of the economy.

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Outgoing ECB president Mario Draghi last night told the European Parliament that there is a lack of “convincing signs of a rebound in growth”.

He said: “Recent data and forward-looking indicators – such as new export orders in manufacturing – do not show convincing signs of a rebound in growth in the near future and the balance of risks to the growth outlook remain tilted to the downside.”

“The longer the weakness in manufacturing persists, the greater the risks that other sectors of the economy will be affected by the slowdown,” he added.

Germany has been warned that its economic model is leaving the country exposed to the ups and downs of international trade.

Influential business leaders are calling for a change in borrowing rules to give the economy a boost during tough periods of trade.

Isabelle Job, chief economist at Credit Agricole, said: “Trade war, Brexit, uncertainty, nothing has changed in the last year.

“Central banks have developed an aversion to cycles. The European economy is slowing down because of the trade war, uncertainty.

“But what can the central bank do? It cannot play with these two factors… shouldn’t the central banks’ mandate be re-balanced to ensure more financial stability?

“Accommodating monetary policies are a blessing for markets. This leads to more risk.”

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