Pressure from all sides
By L.P. | LONDON
Germany is beginning to feel the effects of falling global demand. Manufacturing sector data for its economy in a flash estimate by Markit for August 2012 was slightly better than that recorded in the previous two months, at 45.1 against 43 in July, but the overall output level remains low. The number sits below the important 50-point mark, indicating the economy is likely to be contracting. PMI indices tend to be decent leading indicators of GDP, so the flash estimate is worrying.
Other data add to expectations that German productivity might show signs of greater strain during the third quarter. Official German government statistics confirmed actual GDP contracted by 0.2% between the first quarter of 2012 and the second from 0.5% to 0.3%.
More from Free exchange
Religious competition was to blame for Europe’s witch hunts
Many children are still persecuted as alleged witches in Africa for similar reasons
Has BRICS lived up to expectations?
The bloc of big emerging economies is surprisingly good at keeping its promises
How to interpret a market plunge
Whether a sudden sharp decline in asset prices amounts to a meaningless blip or something more depends on mass psychology