- Wolfgang Schaueble, German Finance Minister
A slew of discouraging data on manufacturing activity in European countries came out yesterday, fuelling concerns over fragile economic health in the region. Manufacturing activity in Germany expanded in August at a slightly slower rate than in the previous month, with the corresponding index edging down to 51.4 compared with July's figure of 52.4. Meanwhile, activity in Italy's and France's manufacturing sector worsened, continuing its downward slide and dampening optimism over the economic outlook. The Manufacturing PMI in France came out at 46.9, down from 47.8 seen in July, while in Italy the index fell to 49.8, reaching the lowest level since July last year. In contrast, positive news came out from Greece, which saw its second-quarter growth fell 0.3% compared with the 4% contraction in the same period in 2013 and following the 1.1% slowdown in the beginning of 2014. Elstat also said that exports soared 5.3% in the second quarter of this year, while imports jumped 4.6% in the same period compared to a year ago. However, Greece's hopes of a possible exit from its deepest recession in a half-century may be seriously undermined by the ongoing geopolitical conflict in Ukraine. These are one of the last pieces of data the ECB policy makers receive before the Thursday's meeting, which will shed some light on future monetary policy direction. German Finance Minister poured some cold water saying that the ECB does not have the tools to fight deflation, as the Eurozone has run out of instruments.
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