Earlier in the week, I put up a short post describing the regional slowdown in the industrial US Midwest. It would now appear, according to this report in Supply Management from the UK, that European manufacturing is slowing as well. According to the CIPS/RBS purchasing managers' index, manufacturing activity in the UK is still on the up, albeit it is increasing at its lowest level since March of this year. And growth on the continent is slowing as well. The Supply Management article notes that, "manufacturing in the Eurozone increased in November but, like UK, at a slower rate."
Without question a weak dollar will hurt European manufacturing exports to the US in the coming months and year. But whether the European manufacturing economy actual contracts -- as many forecasters believe the US manufacturing economy will at some point in 2007 or 2008 --remains to be seen. Fortunately, for European producers, the regional manufacturing economies are not as closely linked with the Big 3 automakers as US many manufacturers are. Because as Ford's and GM's domestic volumes continue to drop, there will only be more pain for US manufacturers with close ties to the Big 3.