Euro-Area Manufacturing Production Contracts

Europe’s manufacturing industry contracted for a third month in October, adding to signs the euro-area economy is edging toward a recession.

A manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region fell to 47.1 from 48.5 in September, London-based Markit Economics said today. That’s below an initial estimate of 47.3 published on Oct. 24. A reading below 50 indicates contraction.

Europe’s economy is showing signs of a deepening slump as its worsening debt crisis erodes the confidence of consumers and executives alike. The Organization for Economic Cooperation and Development on Oct. 31 lowered its euro-region growth projections for this year and next and called on the European Central Bank to lower its benchmark interest rate at its meeting tomorrow.

“We remain of the view that the ECB will be cutting interest rates before long,” Nick Kounis, head of macro research at ABN Amro in Amsterdam, said before today’s report. “Although we think that interest rates will be left on hold this week, we expect a rate reduction in December.”

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