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Poor factory figures heighten euro zone worries

Friday, August 03, 2012 - 01:42

Aug. 3 - More misery for euro zone companies as a sharp drop in new orders in July forced them to cut staff. Joanna Partridge reports.

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The trains in Spain are mainly absent from stations. Rail workers are staging a one day strike to protest against a planned shake up of the network. There's concern that any privatisation would mean wage cuts and job losses - and this against the backdrop of government-enforced austerity. But there's a slow down of another sort that's causing even greater concern. New surveys looking at European economic activity show demand slumped in July. The purchasing managers' index figures usually have a good record of tracking economic growth - and they didn't give much hope the euro zone's debt crisis could turn around soon. Spanish and Italian companies performed particularly poorly in July and there are signs Germany's economy is also beginning to suffer. And while Madrid and Rome's short-term bonds rallied a little on Friday - their longer-term borrowing costs remain in the danger zone. Jose Antonio Martin Quiroga is an analyst in Madrid. SOUNDBITE: JOSE ANTONIO MARTIN QUIROGA, ANALYST AT IG MARKET, SAYING (Spanish): "August is looking like it will be volatile and there will be a lot of uncertainty because no concrete decisions have been taken. We don't know the measures, or when and where these solutions will be made and it seems a bailout for Spain and Italy is inevitable." On Thursday, European Central Bank President Mario Draghi indicated the Bank may start buying government bonds again. But that wouldn't happen until September. And that's a long way away as disappointing data keeps coming in, and the markets want to see Europe taking action now. Joanna Partridge, Reuters

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Poor factory figures heighten euro zone worries

Friday, August 03, 2012 - 01:42