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New European recession on the way?

Unemployment in the eurozone remained becalmed at a record 11.4% in August while manufacturing put in its worst quarterly performance in Q3 since the great depression.

The Markit survey also indicated that after factory output stumbled in the peripheral countries, that trend has now spread to France and Germany.

It all points to the eurozone sliding back into recession. In fact many economists are now convinced that recession is upon us, and will be confirmed when all the figures from Q3 are in.

The Manufacturing Purchasing Manager’s Index showed that while industries cut their prices for a fourth straight month, inflation also rose more than expected in September. This may discourage the ECB from a widely-forecast new cut in interest rates before the end of the year to a record low of half a percent.

Data for France showed the PMI there recording its biggest fall since the index began 14 years ago.

Unemployment rate in Europe August 2012/ * Latest available

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