Weak euro-area to stay as Italy recession looms


FRANKFURT • The euroarea is showing no signs of a meaningful economic rebound, with Italy on the verge of recession after the populist government picked a fight with European authorities over spending plans.

IHS Markit’s Purchasing Managers’ Index for manufacturing and services in the 19-nation bloc fell to 52.7 in November from 53.1 in October.

While the reading exceeded an earlier estimate, it was the worst since September 2016 and suggests only a marginal pickup in the pace of growth to 0.3% in the fourth quarter, according to the report.

“The region remains stuck in a soft-patch,” said Chris Williamson, an economist at IHS Markit. “The survey responses highlighted intensifying headwinds of Brexit and trade-war worries, a struggling auto sector and rising uncertainty regarding the economic and political outlook.” The slowdown is starting to affect the labour market.

Employment expanded at its weakest pace in almost two years in November, with Germany, France and Ireland faring particularly poorly.

The European Central Bank will need to confront signs of falling growth momentum and the threat of a triple-dip recession in Italy, the region’s third-largest economy, when policymakers meet on Dec 13.

They are expected to cap their €2.6 trillion (RM12.45 trillion) asset-buying programme with a pledge to maintain a significant degree of stimulus through reinvestments of maturing bonds.