European economic data released early this morning revealed much of the same story we’ve been seeing for a while: the region is experiencing a marked slowdown, if not nearing recession.
The purchasing managers’ index (PMI) for the Euro-zone manufacturing sector was confirmed at 47.6, signaling contraction for the third consecutive month. Meanwhile, German retail sales fell for the second month in a row, slumping 1.5 percent in July. As a good leading indicator for Euro-zone retail sales, the broader report is likely to disappoint upon release on Wednesday morning at 5:00 EDT. Perhaps the bigger story, though, was news that Commerzbank has agreed to acquire German rival Dresdner Bank for 9.8 billion euros. This would effectively allow the former to become a stronger competitor for their chief domestic rival, Deutsche Bank. However, the move is also expected to result in approximately 9,000 job losses. Furthermore, according to the Wall Street Journal, the transaction has the potential to “trigger further consolidation in a country blanketed with more than 2,000 financial institutions.” Clearly, this is good for business, but not necessarily good for a weakening labor market and slowing consumption.
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