Stock markets plunged yesterday amid growing fears of a sharp global slowdown.
A torrent of negative economic data hit confidence on both sides of the Atlantic, with figures showing that the United States had created fewer jobs than expected last month, that manufacturing activity in China, the troubled eurozone and Britain had weakened and that unemployment across the European Union had continued to rise.
In response, the Dow Jones industrial average dropped by more than 2 per cent to put it into negative territory for the year, the FTSE 100 lost 1 per cent to close at a six-month low and European markets suffered heavy losses, with the French CAC 40 index down 2.21 per cent and Germany’s DAX falling 3.42 per cent. The downbeat data resulted in oil falling to $97.70 a barrel, its lowest level since January last year.
As investors sought safe havens, gold had its biggest one-day rally in more than three years and bond yields for America, Britain and Germany fell to record lows.
In the US, figures from the Labor Department showed that the country generated only 69,000 new jobs last month, below forecasts of 150,000. This made May the third consecutive month to record slowing job creation as employers cut back on hiring amid worries about economic growth.
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Job creation figures for previous months were revised down and the unemployment rate rose by 0.1 percentage points to 8.2 per cent.
Data from China raised concerns that Asia’s largest economy, and the world’s factory, was slowing down. There was also downbeat manufacturing data from Europe, where the Markit manufacturing purchasing managers’ index for the eurozone slipped to 45.1 last month, from 45.9 in April, the lowest reading since mid-2009.
The reading was even worse in Britain as the Markit/CIPS manufacturing PMI index tumbled to 45.9 last month, from 50.2 in April — the lowest level since May 2009 and the second-sharpest fall in the index’s 20-year history.
Another sign of the deepening recession throughout Europe came in the form of eurozone unemployment figures, which showed a euro-era record of 17.4 million, or 11 per cent.