Eurozone: Manufacturing recession or recovery? – Danske Bank

According to Danske Bank analysts, the focus in the market continues to centre on the protracted manufacturing recession in the euro area and when a potential trough may finally be reached.

Key Quotes

“Although weaker manufacturing activity is a global phenomenon, the euro area has experienced by far the largest collateral damage from the rougher global trade environment.”

“In sum, we think the manufacturing recession will drag out into Q4 19, as trade war effects continue to work their way through the supply chain and order-inventory dynamics weigh on production.”

“In 2020 we envision a sluggish path of recovery for the manufacturing sector, supported by receding drag from the car and pharma sector and an upturn in the Chinese manufacturing cycle. That said, event risk remains high, as the recent escalation in the EU-US tariff dispute over illegal Airbus subsidies has shown. Further US tariff escalations - be it with Europe or China - as well as a chaotic No-deal Brexit remain prominent downside risks.”