- Christian Schulz, senior European economist at Berenberg Bank
Wednesday's data from Europe painted a cloudy economic outlook for the region, which shares the single currency. While Italy unexpectedly fell into recessionary territory, German manufacturing orders tumbled in June, adding to evidence geopolitical tensions and slowing global growth threaten the Euro area's recovery. The Euro Zone's third largest economy contracted 0.2% in the second quarter following the 0.1% slip registered in the previous three-month period. On an annual basis, Italy lost as much as 0.3% to GDP compared to a revised 0.4% decline. Last year the economy contracted 1.9%. The renewed recession in Italy, the Euro area's third-biggest economy, is expected to weigh on the region's second-quarter gross domestic product figures. The Euro bloc's economy expanded 0.2% in the three months through March, and the ECB predicts growth of 1% this year. Meanwhile, Germany, European powerhouse, saw its factory orders dropping 3.2% in June from May, while analysts expected a 0.8% increase.
The figures come on the eve of the European Central Bank's August interest-rate meeting, two months after it announced an unprecedented package of stimulus measures including a negative deposit rate and targeted loans to banks. The Euro fell to its weakest against the U.S. Dollar in nine months after the data releases. The single currency slid as low as $1.3333.
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