The Eurozone has the inept ability to turn its sword on itself at almost every opportunity. When the crisis began, it turned what should have been a strong political core into an almost non-existent political system. Then, when the bailout was agreed, it turned what should have been a large financial foundation into a drive for austerity at the cost of growth. Now, the manufacturing industry that once gave the Eurozone hope is the reason for an additional lapse in hope.

There is no way around, Eurozone PMI fell at the fastest pace last month for 2 years. The index figure dropped to 45.9 which indicates a strong possibility of a continued decline in GDP. Anything below 50 on the index represents a contraction in the economy. This doesn’t come as much of a surprise in the Eurozone as we have seen austerity targets take a precedent over the requirement to achieve growth in the Eurozone. Italian, French and German PMI data today illustrated just how bad the situation in the Eurozone really is. Italian PMI fell to 43.8, French fell to 46.9 and German PMI fell to 46.2. To make it worse for the Eurozone, unemployment compounded the worsening state of the economy as German unemployment increased by 19k to 6.8%, with Italian unemployment increasing to 9.8%.

It is difficult to be positive about the Eurozone at the moment. With elections in France and rising social tensions, the Eurozone could have a lot more problems than it bargained for. And with the US and the UK economies looking to isolate themselves from further Euro shocks, it may not be long before the Eurozone is left behind. (JKM)