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KPMG Survey Finds EU Heading Rapidly Towards Recession
KPMG Survey Finds EU Heading Rapidly Towards Recession
KPMG finds the European Union is quickly heading towards a recession. The recently published KPMG Business Outlook Survey, which questions 2,800 service sector firms all across the Union finds that the 12-month outlook for business activity has turned negative. Moreover, activity is expected to decrease on both volume and revenue fronts, and disturbingly, every non-price measure has fallen into negative territory, including new business, employment, profits, capital expenditure and outsourcing.
A silver lining to this dismal outlook is that expectations for inflation have also decreased, along with the precipitous decline in oil prices and commodity price levels since June 2008. But this has little offsetting impact on the larger decline in consumer and business demand.
As further bad news, confidence in the EU service sector economy on business activity outlook over the next year also reduced dramatically in October to a record survey low. This net balance of expected volume of business activity has fallen three times in a row since April 2007 and now stands at -2.9 in October, indicating that more service companies expect activity as also revenue to decline than those anticipating growth.
Along with this negative expectations for activity and revenues and profit pressure, KPMG finds that EU service providers are set to cut workforces over the next twelve months. The net balance fell quickly into negative territory for the first time in October, to -14.4, from +12.2 in April.
According to Andrew Smith, Chief Economist, KPMG, “The extreme downturn in service sector confidence — output, profits and employment are now all expected to fall in the coming year — spells recession for the wider economy as well. The only saving grace is the collapse in inflation expectations, leaving the door open for deeper interest rate cuts in coming months”
While there is raging debate on whether the US is technically in a recession, which requires two consecutive quarters of negative economic growth, this survey shows that EU is also rapidly heading in the same direction with some lag. There was some small hope that EU may have dodged the recession bullet, but this may not be so according to this survey. Now the whole world may be following US’ lead and heading into economic downturn.
KPMG, EU survey, recession, survey
Posted by: Big4 11.11.2008 11:34 am
KPMG finds the European Union is quickly heading towards a recession. The recently published KPMG Business Outlook Survey, which questions 2,800 service sector firms all across the Union finds that the 12-month outlook for business activity has turned negative. Moreover, activity is expected to decrease on both volume and revenue fronts, and disturbingly, every non-price measure has fallen into negative territory, including new business, employment, profits, capital expenditure and outsourcing.
A silver lining to this dismal outlook is that expectations for inflation have also decreased, along with the precipitous decline in oil prices and commodity price levels since June 2008. But this has little offsetting impact on the larger decline in consumer and business demand.
As further bad news, confidence in the EU service sector economy on business activity outlook over the next year also reduced dramatically in October to a record survey low. This net balance of expected volume of business activity has fallen three times in a row since April 2007 and now stands at -2.9 in October, indicating that more service companies expect activity as also revenue to decline than those anticipating growth.
Along with this negative expectations for activity and revenues and profit pressure, KPMG finds that EU service providers are set to cut workforces over the next twelve months. The net balance fell quickly into negative territory for the first time in October, to -14.4, from +12.2 in April.
According to Andrew Smith, Chief Economist, KPMG, “The extreme downturn in service sector confidence — output, profits and employment are now all expected to fall in the coming year — spells recession for the wider economy as well. The only saving grace is the collapse in inflation expectations, leaving the door open for deeper interest rate cuts in coming months”
While there is raging debate on whether the US is technically in a recession, which requires two consecutive quarters of negative economic growth, this survey shows that EU is also rapidly heading in the same direction with some lag. There was some small hope that EU may have dodged the recession bullet, but this may not be so according to this survey. Now the whole world may be following US’ lead and heading into economic downturn.
KPMG, EU survey, recession, survey
Posted by: Big4 11.11.2008 11:34 am
 Views: 185 |
 Comments: 0 |
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