Europe’s Economic Slump Widens

Manufacturing contracted in 14 of the 15 euro-zone countries last month, with Germany's slowed growth as the lone exception. France, Italy, Spain Ireland and the Netherlands posted drops, a manufacturers' purchasing managers survey compiled by research group Markit Economics said. Germany's purchasing-managers index fell to 50.9 in July from 52.6 in June. A reading below 50 indicates a contraction, while above 50 reflects expansion. What had been a divergence among European economies turned into a unified retreat last month as tight credit and high oil prices stoked recession fears. An economist at Lehman Brothers in London said the downturn is now regionwide. While the Spanish economy is clearly in recession territory, the outlook in the rest of the euro zone for the 2nd half of the year has considerably deteriorated. Outside the euro zone, activity in the U.K.'s manufacturing sector plunged to its lowest in a decade, while input and output prices surged at their fastest rate in the survey's 16-year history. An economist at ING Bank Retail said sales in the 2nd-Q have been clearly weaker than in the first, stressing private consumption won't give any helping hand to cushion the inevitable slowdown of the German economy.